Aviva Investors has completed a £72.9 million sustainable transition loan agreement with Commercial Estates Group(CEG), the property investment management and development company.
The senior debt facility, which is provided over seven-year fixed- and floating-rate tranches, forms part of Aviva Investors’ commitment to originating £1 billion in sustainable transition real estate debt over the next four years following the launch of its proprietary Sustainable Transition Loans Framework in December last year.
The transaction is structured with KPIs that are linked to sustainability improvements on assets in the portfolio. CEG will benefit from a margin reduction for delivering specific targets which will be assessed annually throughout the life of the facility.
Whilst CEG will use the loan proceeds to refinance a portfolio of six regional office assets, a portion of it will part-fund the development of Globe Point, a 37,842 sq ft Grade A office in the Temple area of Leeds, which forms the first part of a £350 million project by CEG. The iconic seven-storey building will deliver office space with ground floor break-out space, a café, and will aim to achieve a BREEAM excellent and EPC A rating.
The six regional office assets are located in strongly performing markets such as Liverpool and Bristol, and feature a highly granular mix of over 100 tenants. CEG has invested heavily in the assets to provide modern flexible space with a focus on amenity and wellbeing that appeals to occupiers.
Aviva Investors is providing the financing on behalf of a number of third-party client mandates, which it expects will benefit from a strong and predictable income streams.
“We are pleased to have an opportunity to work with CEG through the provision of this sustainability linked loan, following active discussions over a number of years. CEG have a stated commitment to sustainability and improving the green credentials of its portfolio, which both parties were keen to incorporate into the loan. It is also pleasing to be able to fund the development of a new high-quality asset such as Globe Point. Despite short-term headwinds in the local office market, we are confident this portfolio will perform strongly given CEG’s active management capability and the quality of buildings it produces,” said Gregor Bamert, Head of Real Estate Debt at Aviva Investors.
“We are delighted to be working with Aviva Investors as a strategic partner. We expect this will lead to a long, fruitful collaboration on many more projects to come. Our approach to sustainability is ambitious and embedded into everything we do. We continue to push the innovation boundaries to ensure well-being, technology and sustainability are at the heart of Globe Point,” said Gerard Versteegh, Chairman of Commercial Estates Group.