Aviva meets £1 billion target in sustainable transition RE debt

Aviva Investors has surpassed its commitment to originate £1 billion in sustainable transition real estate debt by 2025, three years ahead of schedule and just 18 months after the launch. The £1 billion target was one of five goals outlined in the company’s Net Zero Pathway of its Real Assets business.

Gregor Bamert, Head of Real Estate Debt, Aviva Investors

The global asset management business of Aviva plc announced that it has provided a £227 million sustainability-linked refinancing to property group Romulus, on behalf of Aviva UK Life’s annuity business. Romulus is a London-based investment and development company which owns and manages a mixed-use portfolio of over one million square feet.

The ten-year, fixed-rate loan is secured against a number of assets owned by Romulus in the office, hotel, leisure and retail sectors and which are located across central London.  

The full value of the loan will be subject to sustainability-linked KPIs, with more favourable borrowing rates available upon Romulus achieving measurable environmental improvements in the assets being lent against. The company has so far “shown great willingness to incorporate sustainability metrics”, Aviva said.

“It is great to have a long-standing borrower client help us reach our £1 billion origination target,” said Gregor Bamert, head of real estate debt, Aviva Investors. “When we created the sustainable transition loans framework, this figure seemed both challenging and substantial, however the reaction and engagement from borrowers has been astounding and we look forward to setting ourselves some even more challenging targets in the next phase of the programme.”

Sustainable investing plays a critical role in Aviva’s annuity business, the group said. Aviva UK Life has now invested approximately £750 million of annuity policyholders’ money into sustainability-linked commercial mortgages. Some transactions are improving the sustainability characteristics of assets under existing loans, not just those being financed by new lending.

“We are very pleased to have agreed a new, long-term facility, particularly one that recognises Romulus’s creative ability to continually add significant value to our investment portfolio and allows us to align our borrowing activities with the sustainability targets we have set for the business,” said Ben Richardson, finance director, Romulus.