OUE REIT Management, the manager of OUE Real Estate Investment Trust, has announced that OUE REIT’s wholly-owned subsidiary, OUE REIT Treasury, has completed the issuance of its S$250 million ($184 million) inaugural green notes at a 4.1% fixed rate due 2027.
The REIT owns seven properties including Crowne Plaza Changi Airport (pictured), One Raffles Place, OUE Bayfront, and the Hilton Singapore Orchard.
S&P Global Ratings assigned a “BBB-” rating to the notes which are OUE REIT’s inaugural green notes and represent its first investment grade issuance under its S$2 billion multicurrency debt issuance programme and the green financing framework established in March 2020 and November 2023 respectively.
At an initial price guidance of 4.35%, the offer achieved a peak orderbook in excess of S$475 million, 3.2 times oversubscribed based on OUE REIT’s initial target size of S$150 million.
Subsequently, the final offer was upsized to S$250 million and pricing was ultimately tightened to 4.10%, 97.3 bps over the 3-year Singapore Overnight Rate Average Overnight Indexed Swap (“SORA-OIS”).
The issuance had a final orderbook of S$425 million (good at reoffer), representing an oversubscription of 1.7 times over the final upsized offer. Approximately 74% of the final allocation went towards institutional investors, according to the media release.
Post-issuance, the proportion of fixed rate debt has increased to approximately 70.6% from 60% as of March 31, 2024 on a pro forma basis, while the weighted average cost of debt is expected to remain largely stable.
Together with the completion of the S$600 million unsecured sustainability-linked loan (SLL) in May 2024, OUE REIT has no refinancing requirements until the second half of 2025 where only 14.4% of the total debt is due.
Its weighted average debt maturity is also expected to lengthen from 2.2 years from March 31, 2024 to 2.9 years on a pro forma basis.
OCBC is the sole global coordinator, while DBS Bank, HSBC, Singapore branch, and OCBC are the joint lead managers and bookrunners of the offering of the notes, and Industrial and Commercial Bank of China, Singapore branch, was the joint lead manager and bookrunner of the offering of the notes.
OCBC is also the green finance adviser to the issuer for the offering of the notes.
Han Khim Siew, OUE REITs’ chief executive officer, said: “The launch of the green notes is part of OUE REIT’s strategy to actively leverage our investment grade credit rating and our green financing framework to lower funding costs from the capital markets and increase financial flexibility for growth by diversifying the pool of funding.
"Post-issuance, the proportion of fixed-rate debt has increased to approximately 70.6%, which will help mitigate the impact of rising interest rates on OUE REIT’s earnings.”
He added: "We are delighted by the robust investor interest in our first investment grade green notes issuance and would like to thank our banks and investors for their continued support on our sustainability journey to achieve 90% of our total debt with green financing.”
