Berlin Hyp increases ‘Green Pfandbrief’ to 1bn euros

Berlin Hyp, which last year launched the first ‘Green Pfandbrief’, has allocated more than €1 billion of loans backing sustainable properties to the covered bond.

Berlin Hyp, which last year launched the first ‘Green Pfandbrief’, has allocated more than €1 billion of loans backing sustainable properties to the covered bond.

The German mortgage bank also announced that it has established a partnership with the Climate Bonds Initiative, a not-for-profit organisation which aims to promote the market for bonds backed by eco-friendly investments.

In April 2015, Berlin Hyp became the first bank to issue a Pfandbrief aimed specifically at tapping into demand from green-focussed capital markets investors. The €500 million seven-year bonds carry a 0.125 percent coupon.

Berlin Hyp HQAt issuance, the bonds’ mortgage cover pool contained 17 loans totalling €657 million. By February 2016, the total nominal value of the loans was €1.02 billion, secured by 30 buildings. However, the pool contains loans which were already in the bank’s cover funds but were not yet identified as sustainable at the time of the issue.

In total, five new loans have been included in the mortgage cover pool after the issuance of the Green Pfandbrief. The five new loans included two office buildings and a retail property in Germany, plus two Polish office buildings. Three were acquisitions and two development projects.

“In view of the positive development of the portfolio, I am confident that we will be able to place the next green bond much more quickly than we thought possible one year ago,” said Gero Bergmann, member of the management board of Berlin Hyp.

The Green covered bond is intended to finance properties with either a green building certificate or an appropriate energy efficiency certificate. Buildings must also meet certain sustainability standards that have been set in cooperation with the sustainability rating agency Oekom Research.

The partnership with the Climate Bonds Initiative follows dialogue between the organisations after the issue of the Green Pfandbrief last April. The Climate Bonds Initiative describes itself as “the only organisation in the world focusing on mobilizing the $100 trillion bond market for climate change solutions.”

“We want to further expedite the rapid growth of the green bond market,” said Bergmann. “The Climate Bonds Initiative has already achieved much in the past to make sustainable securities investments more prominent among an increasingly broad investor base and has set significant standards.

“We would like to support them with their efforts in future. At the same time, we hope to generate an intensive mutual transfer of knowledge on energy-efficient and sustainable real estate,” he added.

“We have won a supporter who has achieved wonderful pioneering work with the issue of the first Green Pfandbrief and look to benefit from the bank’s expertise in the covered bond market, as well as its many years’ of experience in financing green buildings,” said Sean Kidney, CEO of the Climate Bonds Initiative.

“Together, we aim to create market momentum so that more covered bond issuers utilise this highly suitable funding instrument in future for refinancing sustainable real estate, and actively participate in implementing the resolutions of the COP 21 – as Berlin Hyp is already doing today,” he added.

Other real estate lenders are aiming to provide finance which fits the criteria of green investors. In March, Lloyds launched a £1 billion Green Lending Fund which will allow it to provide margin reductions of up to 20 basis points on loans which finance energy-efficient schemes.