These include Charter Hall confirming a further $1 billion in sustainability-linked loans and Frasers Property Australia securing $600 million in green debt, while late last year Brookfield Asset Management closed $970 million of sustainable financing.
Meanwhile, Investa revealed that it is targeting 100 per cent green finance across its core funds by 2025.
Investa’s Commercial Property Fund (ICPF) became the first in Australia to issue a green bond in 2017 and has now secured more than $1.4 billion in green debt, 86 per cent of its total funding.
Its developments are also increasing green debt funded with $700 million secured for Parkline Place and $130 million for Indi Sydney City.
The trajectory of Charter Hall – which has gone from zero green debt in early 2021 to $2.4 billion today, around 10 per cent of its total debt – further illustrates how rapidly the sector is changing.
Phil Schretzmeyer, head of treasury and group planning at Charter Hall, said green financing is now front of mind on both sides of the deal and that the market is gaining genuine depth.
“It’s a lens that’s being put on most financing decisions now, people are asking questions around the ESG credentials of the fund or the asset – it’s getting incorporated into credit decisions, and it’s happening across the board,” Mr Schretzmeyer said.
He said there were cost advantages to going with a green loan, which could be five to 10 basis points cheaper than a traditional debt facility.
“Generally speaking it is cheaper to finance as a green facility, There’s quite a bit of demand from lenders for green financing because they’ve all got their own internal targets they’re trying to meet.”
Mr Schretzmeyer said Charter Hall had embraced the two primary green financing structures.
“One is sustainability linked and that’s more of an impact style of lending where you’ll sit down and work with your lenders to set your environment targets, and you’ll receive a margin benefit for meeting those targets,” he said.
“But equally, if you don’t meet certain targets you might incur a higher margin. Our total book in that space is up to $1.5 billion out of the $2.4 billion.
“The other type of green or sustainable financing is use of proceeds. That’s where you’ve got a specific use identified as being green or sustainable. We’ve done a few of those facilities, so that makes up the other $900 million.”
In its report, CBRE said in Australia the office sector accounted for 50 per cent of green financing transactions, with industrial and retail at 18 per cent to 19 per cent each, followed by residential at just 12 per cent.