Lloyds writes first green development loan

The UK bank has funded a student housing scheme for BlackRock through its green lending initiative.

Lloyds Bank has signed the first development finance deal under its green lending initiative, providing a £39.9 million (€45.3 million) loan to BlackRock Real Estate.

The three-and-a-half-year debt facility will fund a new 272 bed student block in Hoxton, East London, which is due to complete in 2019.

BlackRock will benefit from a 20 basis points margin discount on its loan – covering both development and investment phases – by guaranteeing specific ‘green covenants’, including a BREEAM Excellent rating, a strong Global Real Estate Sustainability Benchmark score and the use of energy-efficient technologies.

Once occupied, BlackRock has committed to procuring all of the building’s energy from renewable sources, running educational initiatives on environmental impact to student residents and providing incentives to students to drive better energy usage behaviours.

“This is a pioneering deal that not only enshrines sustainability into the fabric of the building but also blends technology with on-going occupier interaction to optimise its performance while in use. It sets a benchmark for green development and the way it can be financed,” said James Halstead, vice-president at BlackRock Real Estate.

Lloyds has now arranged more than £850 million of lending to support firms prioritising sustainability. Last week, the bank provided a £50 million facility through its green lending scheme to Ei Group, formerly Enterprise Inns, the UK’s largest leased and tenanted pub company.

The bank’s green lending initiative is a £1 billion commitment, launched in 2016, to incentivise corporate clients’ efforts to reduce CO2 emissions from their real estate assets. The initiative forms part of Lloyds’ Responsible Business agenda.