Masdar's Green Reit signs $200m deal with First Abu Dhabi Bank to boost portfolio

Funding will assist Masdar City in bringing more sustainable property assets to the market

The agreement between Masdar's Green Reit and First Abu Dhabi Bank was announced at the fourth Abu Dhabi Sustainable Finance Forum. Photo: Masdar

Abu Dhabi's Masdar City signed a financing deal worth $200 million with First Abu Dhabi Bank to boost the renewable energy company's portfolio by supporting further acquisitions.

The deal was signed through Masdar City's Green Real Estate Investment Trust (Reit).

The funding from the UAE's biggest lender will help Green Reit to expand its sustainable real estate portfolio through additional property acquisitions in Masdar City, the companies said on Wednesday during the fourth Abu Dhabi Sustainable Finance Forum held on the sidelines of Abu Dhabi Sustainability Week.

The proceeds from the transaction will assist Masdar City in bringing more sustainable assets to the market through new developments while expanding its size.

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The deal comes about a year after Masdar City teamed up with Emirates NBD Asset Management to receive management services for the UAE’s first sustainable Reit.

FAB will act as sole mandated lead arranger and bookrunner, green loan co-ordinator, agent, security agent and account bank for the transaction.

“Investors are increasingly looking for responsible investment opportunities and evaluate companies based on specific environmental, social and governance practices criteria," said Abdulla Balalaa, executive director of Masdar City and chairman of the Reit.

"The Masdar Green Reit will give investors the responsible and forward-thinking investment options they are looking for, via these sustainable income-generating real estate assets, with a primary focus in Masdar City."

The UAE is at the forefront of major and inclusive sustainability initiatives. Last October, it committed to achieve net zero emissions by 2050, becoming the first state in the Mena region to do so.

The country plans to invest Dh600 billion in clean and renewable energy sources to realise this goal.

This week, the UAE government launched SDGs Young Leaders Programme to convince young people to be part of local and global green initiatives by equipping them with the skills to participate in national and international initiatives to build a more sustainable future.

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The Mohammed bin Rashid Solar Park is expected to generate 5,000MW of electricity by 2030 and is expected to drive up to Dh50 billion in investment. Courtesy: Masdar

Abu Dhabi unveiled its Sustainable Finance Declaration in 2019, which was signed by 25 public and private sector entities, including Masdar City and the Abu Dhabi Global Market.

The declaration was aimed at establishing a healthy and sustainable finance industry that supports the UAE in attaining the UN Sustainable Development Goals.

Climate concerns were named as the "world's most critical danger" over the next two years, according to a report by the World Economic Forum. Sustainability initiatives will be able to address this problem.

"The transaction serves to underline FAB’s ongoing commitment to Masdar and sustainable financing, and we look forward to further deepening our relationship as Masdar implements its exciting plans to grow its high-quality portfolio,” said Mustafa Al Khalfawi, head of global banking for the UAE and global head of the government, sovereigns and public sector at FAB's investment banking group.

Investors are increasingly looking for responsible investment opportunities and evaluate companies based on specific environmental, social and governance practices criteria. The Masdar Green Reit will give investors the responsible and forward-thinking investment options they are looking for

Abdulla Balalaa, executive director of Masdar City and chairman of Masdar Green Reit

Masdar, active in over 40 countries, has been advancing the commercialisation and use of renewable energy, sustainable urban development and clean technology since 2006.

In 2018, it signed the first green revolving credit product in the Middle East, helping to support its investments in global clean technology and sustainable property projects.

The company announced Green Reit during the 2020 ADSW event. It was the first in the UAE to invest solely in sustainable property projects.

FAB is a regional leader for sustainable finance in the Middle East, with total assets worth $268 billion (Dh983bn) as of the end of September 2021.

It issued the region’s first green bond in 2017, has financed more than $30bn in sustainable projects to date and executed the first green repurchasing transaction in the Middle East in partnership with Deutsche Bank last year.

It was also the first bank in the region to commit to net zero greenhouse gas emissions by 2050 and to join the Net-Zero Banking Alliance. The lender was part of the UAE delegation to the Cop26 climate conference in Glasgow last November.

Updated: January 19, 2022, 12:58 PM