How a dozen banks and a green trigger recast a $1.4b debt deal

afr.com:

Scape has followed up a $1 billion-plus fundraise with a $1.4 billion debt deal tied to green targets, that will enable the borrower to convert the debt into sustainable financing in future.

The student housing operator appointed Commonwealth Bank and ANZ, alongside 10 other lenders, to a transaction that motivated Scape to lower emissions and reduce waste in the future.

Tim Peel, chief financial officer at Scape, said the company’s latest $1.4 billion debt deal helped consolidate existing debt from previous acquisitions. Peter Rae

Scape’s new sustainable loan comes five months after two Dutch investors – pension provider APG and property fund manager Bouwinvest – backed the company’s $1.5 billion build-to-rent fund.

Unlike many so-called sustainability-linked bonds or loans, Scape’s approach was different. In November, it was in talks with lenders about putting new financing in place, but it was not yet ready to attach sustainability targets to its debt.

The company’s debt sits within its core assets program, which is structured like an unlisted real estate investment trust, chief financial officer Tim Peel said. Scape acquired a portfolio of properties from peer Atira for about $700 million in 2019, and beefed up its portfolio in 2020 when it bought 14 assets from Urbanest.

The acquisitions meant Scape was saddled with multiple debt facilities, and Mr Peel wanted to place the debt into a singular facility, ahead of the existing loans’ April 2023 maturity.

“It was getting to the point where lenders… you really need to do everything you can to make a loan interesting,” he said, observing that more bank capital was available for sustainability-linked transactions.

“We tried to do it nice and early [in November 2022]… The