Ivanhoé Cambridge and Residential Land source £465m refinancing for London portfolio

The joint venture partners have agreed to a sustainability-linked loan from lenders HSBC and OCBC.

Garden House, Bayswater
Garden House, Bayswater: Among the refinanced assets

Residential investment vehicle Prime London Ventures has secured a £465 million (€540 million) sustainability-linked loan from UK bank HSBC and Singaporean lender OCBC Bank to refinance its portfolio of prime residential assets in central London.

The five-year facility, which includes a revolving credit facility for capital expenditure, is secured by a portfolio of upmarket residences located in some of the most exclusive areas of the UK capital, including 21 apartments overlooking Regent’s Park, 65 units in Mayfair, and homes in Bayswater, in the City of Westminster.

Under the terms of the loan, Prime London Ventures – a vehicle owned by Ivanhoé Cambridge, the real estate platform of the Quebec state pension fund Caisse de dépôt et placement du Québec, and London landlord Residential Land – has agreed to upgrade Energy Performance Certificates and reduce carbon emissions across its properties. HSBC UK acted as sole sustainability-linked loan co-ordinator.

The sustainability targets include a commitment to reduce Scope 3 emissions, which are the indirect emissions that occur in the activities of an organisation.

Scope 3 targets are a rare feature of green lending in Europe owing to the difficulty of tracking the energy consumption of a property’s tenants. However, both HSBC and OCBC have begun to consider Scope 3 as part of their lending activities.

The Polish branch of HSBC Continental Europe required borrower Cromwell Property Group to report on indirect emissions as part of €66 million green loan facility it provided for the Janki shopping centre in Warsaw in September. While in May, OCBC said it expected to achieve 100 percent reduction in carbon emissions, including Scope 3, in real estate by 2023.

Jonathan Rust, chief financial officer at Residential Land, said: “For more than 10 years, we have worked closely to align the sustainability goals of our respective organisation. We are committed to our target programme of carbon emission reduction and we, along with our tenants, are already seeing the positive impact of these initiatives.”

Residential focus

Lending to the residential sector has also been a key focus area for debt providers in recent months. According to indicative data tracked by Real Estate Capital Europe from 1 September to 20 November the residential sector was the leading asset class in the sample, recording 18 deals totalling €3.8 billion – more than double the issuance to logistics, which was the next most popular sector in both categories.

Across the loans tracked during the period, 27 were for UK-based assets – by far the largest destination country, with no other market accounting for more than 10 loan issuances.

Prime London Ventures was set up by Residential Land, Ivanhoé Cambridge and US opportunity fund Apollo Global Management in 2018, to invest in private rental sector homes in central London.