Commonwealth Bank and Oxford Properties Group (Oxford) have signed a $130 million build-to-rent green loan, the first loan of its type in Australia.
Indi Sydney City, owned by Oxford, will manage and develop the sustainable high-rise residential building, becoming Sydney CBD’s first build-to-rent development, and its operations will be carbon neutral.
According to Michael Thorpe, managing director, Future Cities and Networks at Commbank, “Indi Sydney City has been designed to deliver exceptional sustainability outcomes, so that residents share the views and amenities, as well as the building’s energy efficient infrastructure.”
Thorpe says that the project has earned Green Loan certification through strong sustainability credentials and environmental commitments.
According to the World Bank, green loans enable borrowers to fund projects with environmental objectives. While similar to a green bond, a green loan is often smaller in volume with lower transaction costs and is often privately placed.
Best practice sustainability outcomes in the development include onsite renewable generation, high efficiency cooling systems, energy and water efficient appliances, improved tracking of operational performance via sub-metering, and regenterative lifts delivering up to 25 per cent improvements to lift energy efficiency.
In order to qualify for the Green Loan, Oxford and Indi’s owner Investa developed a Green Financing Framework in line with Green Loan Principles (GLP).
The Loan Market Association's, Green Loan Principles outline the characteristics of a Green Loan and have four key components, being use of proceeds, process for project evaluation and selection, management of proceeds and reporting.
According to the LMA’s report, “The Green Loan Principles (GLP) have been developed by an experienced working party, consisting of representatives from leading financial institutions active in the syndicated loan market, with a view to promoting the development and integrity of the green loan product."
When it comes to build-to-rent properties, Andrew Hinchliff, group executive of institutional banking and markets at Commbank said that the changing needs of Australians require “flexible modes of living”.
“Build-to-rent properties will play a key part in Australia’s future, and we’re very proud to have been able to help Oxford break new ground with this sustainable development.”
Margot Black, general manager, corporate sustainability at Investa said the loan reflects the company’s commitment to a low carbon economy.
“Investa has been focused on diversifying its sources of debt and supporting the growth of the sustainable finance market in Australia since the platform closed its first green loan in 2019. The successful development of a Green Financing Framework with Oxford, and the execution of the first green loan for the Indi platform under this Framework, is a significant achievement for all parties.”