ESR closes SLL in Hong Kong for a data centre project

Author: Isha Jain

ESR Group, together with its subsidiaries and support from CLP Power Hong Kong, has closed the first sustainability-linked loan (SLL) in Hong Kong for a brown field data centre project. 

The HK$1.6bn SLL will be used to fund the conversion of a building in Kwai Chung into the modern and sustainable, ESR Kwai Chung Data Centre HK1, which has a design IT power load of 21.3MW. ESR had acquired the building in 2021 and signed a memorandum of understanding with CLP Power in 2022 on green initiatives for future data centres and logistics centres in Hong Kong and the Greater Bay Area.

The five-year secured, committed facility has a tiered incentive mechanism where ESR will be entitled to an interest reduction when the project’s sustainability targets are achieved. It is targeting data centre tenants which have strong sustainability related credentials to rent the premise. 

CLP Power, which is committed to enhancing customers’ energy efficiency, is providing energy audit and advisory services to ESR to formulate the KPIs of the SLL. These include sustainable features, such as a diesel generator-free construction site and a green wall in the facade.

In support of ESR’s efforts to further strengthen its ESG commitments, Crédit Agricole CIB acted as the sole sustainability advisor and coordinating bank, and SMBC and UOB acted as sustainability agents. All three lenders are also mandated lead arrangers. 

To date, ESR Group has closed a total of seven SLLs with approximately US$4bn, as it continues to integrate ESG into all aspects of its financial management, operations and development.

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