ESR secures US$243m sustainability-linked loan

ESR secures US$243m sustainability-linked loan

ESR Cayman has secured a sustainability-linked Loan (SLL) of JPY28 billion (US$243 million) with an option to upsize it to JPY35 billion (US$303 million).

The group has secured the loan from a consortium of leading Asian banks, including the group’s strategic investor Sumitomo Mitsui Banking Corporation (SMBC) which acted as sustainability advisor and mandated lead manager. Other mandated lead Managers included Mizuho Bank, Ltd. (Mizuho) and E.Sun Commercial Bank, Ltd. (E.Sun). 

The five-year senior unsecured, committed corporate facility is designed with the same tiered incentive mechanism as the group’s inaugural US$1 billion sustainability-linked loan which closed in November 2021. ESR will be entitled to a reduction of interest rate (currently at Tibor plus 1.8%) as sustainability targets are achieved.

The proceeds will be used to fund the Group’s refinancing of existing borrowings, working capital requirements and for general corporate purposes, ESR said.

This JPY28 billion SLL also comes on the heels of the ARA US$1 billion sustainability-linked loan which recently closed in January. Structured as a dual currency USD-SGD facility, ARA’s five-year unsecured committed facility is also designed with a pricing incentive mechanism to the extent it achieves its sustainability targets.

Jeffrey Perlman, Chairman of ESR, said: “ESG sits at the heart of our business, playing a key role in each and every part of our operations. With the closing of this financing, I am very pleased that the group is already realising on its cost-of-capital synergies from the ARA acquisition. As the largest real asset manager in APAC, we have a strong sense of common purpose and a vision to focus on the well-being and long-term priorities of our broader community and environment. We look forward to using the proceeds of this loan to sustainably enhance our assets, operations and the communities in which we work.”

Jeffrey Shen and Stuart Gibson, Co-founders and Co-CEOs of ESR, said: “We would like to express our gratitude to SMBC, Mizuho and E.Sun for their recognition of the group’s achievements and continued progress and emphasis on sustainability. We are also delighted to have expanded our relationship with SMBC which became ESR’s strategic investor as a part of the ARA acquisition. Together with the two sustainability-linked loans ESR and ARA closed previously, these facilities are important milestones as we seek to integrate sustainability in all aspects of our business in pursuit of our goal of creating a positive impact on our stakeholders and the communities where we operate.”