Far East Hospitality Trust (FEHT) has secured its first sustainability-linked loan facility worth $125 million on March 29.

The five-year loan was secured from OCBC Bank, the sole lender of the transaction.

The loan will be used to refinance FEHT’s existing bank borrowings. The loan’s interest margin will be tied to selected sustainability targets set together with OCBC Bank.

The targets include the reduction in the energy consumption of its portfolio and improvements in the Building and Construction Authority (BCA)’s green mark certification for FEHT’s existing properties.

SEE:Further relaxation of measures bodes well for office, retail and hospitality REITs: DBS

Get the latest Singapore corporate news stories for FREE

If the targets are met, the interest margin will be reduced on a tiered basis.

FEHT’s portfolio of 13 properties in Singapore includes landmarks such as Oasia Hotel Downtown and Village Hotel Albert Court, which was awarded the BCA Green Mark Platinum certification by the BCA since 2015.

“We recognize our responsibility in conserving the natural environment and have incorporated sustainability and enhancing operational efficiency as essential parts of our operations. This maiden green loan strengthens our approach and commitment in managing our properties,” says Gerald Lee, CEO of the managers.

“We are glad to support Far East Hospitality Trust on this sustainability-linked loan. The continued commitment from like-minded corporates like Far East Hospitality Trust will contribute to the larger goal of building a greener world for future generations. We hope more of their peers will adopt this long-term mindset and take action to shift towards greener sources of financing,” says Elaine Lam, head of global corporate banking, OCBC Bank.

Units in FEHT closed 0.5 cent lower or 0.8% down at 62.5 cents on March 29.