The Student Hotel (TSH) has secured €82 mln for its two new hotel projects in Paris and Toulouse through an innovative ESG (Environmental, Social and Governance) financing structure from Crédit Agricole CIB.
The funding combines the characteristics of a green loan with a sustainability-linked loan, which the French bank is applying to a structured credit line for the first time in the European real estate investment industry.
Under the terms of the green loan, TSH is targeting the international BREEAM ‘Very Good’ rating for both buildings.
Lucas Rijckmans, Chief Corporate Services at TSH, said: 'The Student Hotel and Crédit Agricole CIB have agreed a pioneering green financing package for our development and refurbishment projects in Paris and Toulouse. The terms of this combination green loan mirror the targets of our ambitious sustainability strategy that will overlay the entire European TSH portfolio, which is set to triple in size over the next five years.'
French bank Crédit Agricole CIB, which is acting as arranger, underwriter, bookrunner and agent, has coupled the green loan element of its financing package, which provides funding for TSH to improve the sustainability of its assets, with a ‘sustainability linked margin’ that sets ESG goals that, if achieved, result in interest rate cost savings.
The Paris development accounts for 58% of the TSH financing package, and the Toulouse refurbishment for the remaining 42%. The Amsterdam-based operator, developer and investor plans to operate more than 4,000 hotel and extended-stay rooms in France by 2022.
The new financing also forms part of a €2 bn accelerated pan-European investment programme by TSH that will increase the number of its hotels in operation across Europe from 13 to 38 over the next five years.
Nathalie Sarel, head of Sustainable Banking at Crédit Agricole CIB, said: 'Green finance is playing a growing role in guiding companies towards integrating ESG elements in their operations. This is particularly important for the real estate sector, which is a major source of the CO2 emissions that contribute to global climate change. With this ground-breaking green financing structure, The Student Hotel is showing its commitment to developing green assets and incorporating ESG targets, and is making a big step forward to address its environmental and social challenges.'
The Student Hotel could achieve a saving on the annual interest rate applied to the full €82 mln green loan for every year TSH achieves the target ESG thresholds in the reduction of energy consumption, food waste production and social diversity of its workforce. These goals are divided 50/50 between the TSH Group level, for the aggregated pan-European portfolio, and the two French assets being financed.
The ESG targets are:
To improve TSH’s overall Global Real Estate Sustainability Benchmark (GRESB) rating score at the Group level.
The TSH Group has set a target that 2.5% of the company’s workforce at all its locations should consist of people with ‘a distance to the labour market’. It is rolling this programme out across European markets, including Toulouse and Paris when they become operational.
For the Paris and Toulouse projects, TSH aims to meet, or undershoot, the Paris Climate Accord target that buildings should only consume 50 kWh/m2.
Amber Westerborg, Impact Manager at TSH, said: 'TSH is committed to growing consciously and sustainably, and actively engages its students, guests, entrepreneurs and other tribes in the process. We believe that by doing so we can make the most positive impact. Our goal is to create innovative buildings and projects where individuals are transformed into a community of changemakers that will ultimately go out and change the world for good.'
Paris and Toulouse Projects
TSH entered the French market in 2015 with a pilot site in Paris La Défense. Its second hotel in the city, within the 19th district, is due to open in March 2022 and will comprise circa 300 rooms over 11,000 m2 incorporating the full TSH brand experience. The all-in cost of the project is put at around €65 mln.
Construction of the Toulouse hotel, which is located in the Compans Caffarelli area in the centre of the city on Place de l’Europe, and which will also incorporate the full TSH brand experience, began in September and is due to open in July 2021. TSH’s total investment in the Toulouse project is in excess of €45 mln, and will allow the extension and refurbishment of a former barracks into 12,000 m2 of student accommodation and hotel, with 354 high-profile rooms, design common areas and a rooftop with a pool and 360-degree views of the city.