Masdar Green REIT signs financing commitment with First Abu Dhabi Bank

An initial commitment of $200 million was announced during the Abu Dhabi Sustainable Finance Forum, part of Abu Dhabi Sustainability Week 2022
An initial commitment of $200 million was announced during the Abu Dhabi Sustainable Finance Forum, part of Abu Dhabi Sustainability Week 2022

Abu Dhabi - The financing agreement, adopting LMA Green Loan Principles, will support the growth of Masdar Green REIT’s sustainable real estate portfolio


A Staff Reporter

Published: Wed 19 Jan 2022, 5:47 PM

Masdar City through its Masdar Green Real Estate Investment Trust (REIT), has signed a financing commitment in the amount of $200 million with First Abu Dhabi Bank (FAB) relating to financing of the REIT portfolio to facilitate further acquisitions and portfolio growth.

FAB will act as sole mandated lead arranger and bookrunner, green loan coordinator, agent, security agent and account bank for this transaction.

The announcement was made during an official signing ceremony held at the fourth Abu Dhabi Sustainable Finance Forum during Abu Dhabi Sustainability Week - the global platform for accelerating sustainable development hosted by Masdar. The announcement comes 12 months after Masdar City partnered with Emirates NBD Asset Management to receive management services for the UAE’s first sustainable REIT.

“Investors are increasingly looking for ‘responsible’ investment opportunities and evaluate companies based on specific environmental, social and governance (‘ESG’) practices criteria,” said Abdulla Balalaa, executive director, Masdar City and chairman of the REIT.

“The Masdar Green REIT’s portfolio currently includes four commercial properties within Masdar City, which is the pioneering sustainable urban development project, and technology innovation hub, in Abu Dhabi. The financing from First Abu Dhabi Bank, will help the REIT in building its sustainable real estate portfolio through additional acquisitions of properties in Masdar City. The proceeds of these acquisitions will in turn assist Masdar City to bring more sustainable real estate assets to market through new sustainable developments and continuing the future expansion of Masdar City,” he said.

“The Masdar Green REIT will give investors the responsible and forward-thinking investment options they are looking for, via these sustainable income-generating real estate assets, with a primary focus in Masdar City. The properties within the Masdar Green REIT’s current portfolio consume approximately 40 per cent less electricity and water than comparable buildings in Abu Dhabi, targeting sustainability ratings of three Pearls or above on Abu Dhabi’s Estidama Pearl Building Rating System, while one asset is also LEED Platinum certified. This REIT also intends to provide a vehicle through which third-party, sustainable developers can monetize their assets, attracting both real estate developers to Masdar City, and aspiring local and international sustainable investors,” Balalaa added.

As the UAE's largest bank and one of the world's largest and safest financial institutions, FAB is a regional leader for sustainable finance in the Middle East. FAB issued the region’s first green bond in 2017 and has financed over $30 billion in sustainable projects to date. In 2021, the bank executed the first green repurchasing (‘repo’) transaction in the Middle East, structured in partnership with Deutsche Bank. FAB was also the first bank in the region to commit to net-zero greenhouse gas emissions by 2050 and to join the Net-Zero Banking Alliance and was part of the official UAE delegation to the COP26 climate conference.

Mustafa Al Khalfawi, head of Global Banking UAE and global head of Government, Sovereigns & Public Sector, Investment Banking Group, said: “First Abu Dhabi Bank has made a commitment to fund projects that deliver tangible environmental and social benefits, and we are leading the way forward in financing the transition to a more sustainable future. As one of our strategic clients, we are delighted to support Masdar City in this landmark transaction, with an innovative and flexible financing structure to enable the Masdar Green REIT to fulfil its strategic objectives. The transaction serves to underline FAB’s ongoing commitment to Masdar and sustainable financing, and we look forward to further deepening our relationship as Masdar implements its exciting plans to grow its high-quality portfolio.”

Masdar City announced it was launching the green REIT, the first in the UAE to invest solely in sustainable real estate projects, during Abu Dhabi Sustainability Week (ADSW) in January in 2020. The Masdar Green REIT was established at Abu Dhabi Global Market (ADGM) as a Qualified Investor Fund (QIF) and is managed by Masdar Capital Management Limited which is regulated by the Financial Services Regulatory Authority. Masdar Green REIT intends to offer an attractive opportunity for professional investors through private placement to invest in a unique portfolio of stable, income-producing, sustainable real estate assets.

The Masdar Green REIT marks great progress in bringing the Abu Dhabi Sustainable Finance Declaration to life, which was signed in 2019 by 25 public and private sector entities, including Masdar City and the ADGM, and is aimed at establishing a healthy and sustainable finance industry that supports the UAE in attaining the United Nations Sustainable Development Goals.

Currently active in more than 40 countries, Masdar has been advancing the commercialization and deployment of renewable energy, sustainable urban development, and clean technologies, to address global sustainability challenges since 2006. In 2018, Masdar signed the first green revolving credit facility in the Middle East, helping to support its investments in global clean technology and sustainable real estate projects.

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