Barings debuts European green lending

One of the world’s largest real estate investment managers has agreed to provide two sustainability-linked loans against assets in the UK and the Netherlands – its first in the region.

Barings Real Estate said the loans, both of which would be used to improve ESG credentials in the buildings, reflect the growing importance of ESG investment to both the lender and to investors more broadly.

In the UK, Barings agreed a £48.6m seven-year fixed-rate loan to finance the acquisition of a retail and leisure park in Romford, east London, called The Brewery by Schroders Capital UK Real Estate Fund and Immobilien Europa Direkt.

Barings agreed to provide the loan under its separate account with retirement business Phoenix Group.

Funds will be used to retrofit existing buildings to increase EPC ratings and to invest in initiatives to enhance biodiversity, health and wellbeing and tenant and community engagement. Solar-powered EV chargers will also be included in refurbishment plans.

In the Netherlands, Barings will provide an undisclosed sum to a company managed by Round Hill Capital to finance refurbishments at Amsterdam’s Rembrandt Park One office building.

Plans will focus on achieving a BREEAM Excellent rating through on-site renewable energy generation by a thermal energy storage system and photovoltaics. The refurbishment will also include 600 bicycle parking spaces, a restaurant and on-site gym.

The loans are part of a wider trend of investors attaching sustainability goals to their lending activity – something PlaceTech explored last year.

Sam Mellor, head of European and APAC real estate debt at Barings, said: “These loans are not only substantial additions to our growing real estate debt offer, but also an example of our appetite to innovate in order to seek greater returns for investors and make a tangible environmental impact.”

Charles Weeks, head of European and APAC real estate at Barings, said: “While we’ve had many more opportunities to focus and shape our assets secured through equity up until now, we’ve been eager to find the right opportunities for sustainability-linked loans for some time.

“With a growing team, including new colleagues in real estate debt and ESG, we’re keen to explore further such loans across Europe.”