Driven by the desire to find solutions to societal challenges, Swedish real estate company Trianon issued the first sustainable hybrid bond in the Nordic market to fund sustainable housing projects that address social and environmental issues.
Trianon issued 400m SEK in perpetual hybrid notes in the spring of 2019, with the net proceeds to be used according to the company’s Sustainability Bond Framework. The bond, which is listed on the Nasdaq Sustainable Bond Market, attracted strong investor demand.
“The demand was big, and the bond was oversubscribed, which was a clear sign that many investors showed us their confidence in the market and Trianon’s compelling growth story, that is, sustainable housing offering employment as well as housing in green buildings,” said Mari-Louise Hedbys, Vice President and CFO at Trianon.
Building Sustainability
As a firm that owns, manages, develops and builds housing and commercial properties in the coastal city Malmö, Trianon believes that social, economic and environmental sustainability is not only critical to success but also part of its core responsibility as a property owner and landlord.
The firm actively works with the United Nations Sustainable Developments Goals (SDGs), incorporating several goals into its investment and operating strategies, including:
-Affordable and Clean Energy
-Decent Work and Economic Growth
-Reduced Inequalities
-Sustainable Cities and Communities
-Climate Action
Since 2011, Trianon has worked to implement social and sustainability measures at some of its various properties. The firm noted that the measures put in place at the Vårsången housing complex have resulted in a positive trend.
“Several of the residents have been employed, the properties today are more environmentally sustainable, and the relocation frequency has decreased from 20% to 7%. More employed residents effect the over all housing stability especially in terms of school results, reduced damage, safer areas and an increased property value,” Trianon said in its 2019 Sustainability Bond Framework.
Now, with funding generated from its sustainable hybrid bond, Trianon is bringing those sustainability initiatives to other buildings and locations in Malmö, including Hermodsdal, Lindängen and Nydala.
Hybrid Bond
Trianon is tackling sustainable housing by funding two kinds of projects: social and green.
“Our social-eligible projects include capital and operational expenditures with an overall objective of increasing well-being in socio-economically weak areas,” said Hedbys. “That includes affordable housing and employment generation, both permanent and temporary work placement of the local residents by Trianon or its partners.”
“Our green-eligible projects include capital expenditures for climate-related activities with the objective of reducing the overall climate footprint of Trianon and its residents, such as improving energy efficiencies and investments in renewable energy,” continued Hedbys.
The proceeds from the hybrid bond will be used in accordance with the Trianon’s sustainable framework, with a focus on social sustainability. So far, funds from the bond have been used for the partial financing of the acquisition of 781 apartments with an underlying property value of SEK 900 million, located at Hermodsdal and Almhög in Malmö.
While investors recognized the value of funding these social and green projects, Trianon understands the challenges ahead.
“Compared to environmental goals, it is more difficult to set boundaries on the social goals because they will be affected by the economic cycles,” said Hedbys.
Beyond setting the parameters for investors, the Swedish real estate company also acknowledges the moves it needs to make in order for their projects to make a strong impact.
“We will need to focus more on leasing and security-creating measures in, for example, Lindangen and Hermodsdal, which means that we are reorganizing to be able to staff a certain hub (in Swedish BoHubb) for increased service, employment services and hiring,” said Hedbys.
As Trianon moves forward to address the socio-economic concerns of Malmö, it encourages other firms to embrace green initiatives.
“Be brave and pave the way for new solutions! Set ambitious goals, but be realistic at the same time,” Hedbys concluded.
Source Nasdaq