RAM Sustainability accords Gold Sustainable Finance Rating to Sunway REIT’s Sustainability-Linked Financing Framework

Published on 23 Aug 2024.

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RAM Sustainability has completed the external review of Sunway Real Estate Investment Trust (Sunway REIT or the REIT)’s Sustainability-Linked Financing (SLF) Framework (the Framework) and accorded it a Gold Sustainable Finance Rating. The Framework will be the guideline for all SLF undertaken by the REIT and its subsidiaries, including but not limited to SUNREIT Bond Berhad, SUNREIT Perpetual Bond Berhad, SUNREIT Capital Berhad and any future special-purpose vehicle (collectively, the Issuer).

We have concluded that the Framework has an Aligned disclosure level when assessed against the Securities Commission Malaysia’s Sustainable and Responsible Investment linked (SRI-linked) Sukuk Framework, the ASEAN Capital Market Forum’s Sustainability-Linked Bond Standards, International Capital Market Association’s Sustainability-Linked Bond Principles, and the Sustainability-Linked Loan Principles issued by the Loan Market Association, Loan Syndications & Trading Association and Asia Pacific Loan Market Association.

Overall, Sunway REIT’s sustainability governance processes and policies sufficiently address potential environmental, social and governance risks arising from the business operating environment of REIT players. Sunway REIT has identified carbon emissions from building energy consumption within its portfolio as a material issue. To address this, the REIT is prioritising solutions that enhance energy efficiency and increase the use of renewable energy (RE).

The REIT has selected two key performance indicators (KPIs) in the Framework – annual RE generation and building energy intensity (BEI). Sunway REIT’s sustainability performance targets (SPTs) are to increase RE generation by 2% and lower BEI by 0.5% annually. By 2030, the REIT targets achieving 3,524 MWh of annual RE generation and a BEI of 284 kWh/m2/year, demonstrating its commitment to attaining these levels over the medium term. In our view, the KPIs and SPTs are material to the REIT’s sustainability strategy and ambitious targets towards reaching its sustainability goals.

The financial characteristics of the Framework are viewed to provide an adequate incentive for the Issuer to achieve its targets. The achievement of a SPT is linked to step-down adjustments in coupon rate and/or a waiver of purchase of Renewable Energy Certificates and/or other arrangements agreed with the respective SLF subscriber/counterparty. Conversely, the Issuer will be penalised if a SPT is not met. Sunway REIT commits to reporting KPI performance in its annual sustainability report, which is publicly available on its corporate website. The report will be externally verified annually by an appointed independent third-party reviewer.

As of 30 June 2024, Sunway REIT managed a diverse portfolio with assets strategically located across the key states of Selangor, Kuala Lumpur, Penang, Perak and Johor, among others, solidifying its position as one of Malaysia’s largest diversified REITs. Its property portfolio comprises 25 assets in the retail, hotel, office, services, industrial and others segments. In July 2024, SUNREIT Bond Berhad issued RM1.6 bil of Sustainability-Linked Medium-Term Notes (SLMTN) under its SLMTN Framework.

 

Analytical contacts
Joel Thum
(603) 3385 2517
joel@ram.com.my

Amirah Jamil
(603) 3385 2551
amirah@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my

 

This external review or second opinion is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for an investor, nor does it involve any audit by RAM Sustainability.

About RAM Sustainability

RAM Sustainability Sdn Bhd (RAM Sustainability) is a provider of sustainability services and ESG analytics. Incorporated on 31 May 2000, RAM Sustainability is a wholly owned subsidiary of RAM Holdings Berhad (RAM Group). RAM Sustainability is the first ASEAN-based provider of ESG ratings and second opinions and has the distinction of being the first Registered Observer of ICMA’s Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines and Sustainability-Linked Bond Principles in ASEAN. It was a member of ICMA’s Advisory Council to the Green Bond Principle and Social Bond Principle Executive Committee for three consecutive terms. On 12 August 2020, RAM Sustainability became an Approved Verifier for the certification of climate bonds under the Climate Bonds Standard & Certification Scheme after having been awarded the status by the Climate Bonds Standards Board. For further details, please refer to https://www.ram.com.my/sustainability.

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