Aldar Properties secured a Dh300 million loan from HSBC whose interest margin is linked to the developer meeting defined sustainability targets.
The five-year loan includes a mechanism that adjusts the level of interest paid in line with the company achieving targets around energy and water efficiency, waste recycling and worker welfare. If it does not meet the targets, Abu Dhabi's biggest listed developer will invest a fixed amount in one or more qualifying environmental, social and governance (ESG) projects, the company said.
“Our financial stakeholders are increasingly factoring sustainability assessments into their portfolio strategies. At Aldar, we believe this shift in capital allocation is a positive force that creates a powerful incentive for companies to up their sustainability game to benefit from these capital flows," said Greg Fewer, the company's chief financial and sustainability officer. "As a leader in our market, Aldar is ideally positioned to benefit from this trend.”
Aldar, which created a new operating model this year based around two core businesses - investment and development – made a net profit of Dh1.9 billion last year on revenue of Dh8.4bn. It has a 65 million square metre land bank and more than 8,000 units under development, according to its 2020 Sustainability Report, published last week.
The report highlighted a number of ESG initiatives undertaken last year, including Dh190m invested in its residential communities, schools and retail partners, a pledge of Dh30m to the Sandooq Al Watan initiative aimed at developing the skills of Emiratis, new mandatory sustainability training modules for staff, and the launch of a companywide energy management project aimed at reducing emissions.
This year, the company is planning to introduce a Sustainability Data Management System to improve the quality and availability of relevant data across the business, the company said on Sunday.
“The real estate sector plays an important role in helping the world tackle climate change, considering up to 70 per cent of emissions in a large city are related to its buildings," said Mohammed Al Marzouqi, head of global banking at HSBC UAE.
The loan secured by Aldar is the first in the Middle East and North Africa that has to meet the Loan Market Association's Sustainably Linked Loan Principles, setting "an important precedent in the region", he added.