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In brief: Aviva links £50m real estate loan to decarbonisation

Aviva is deploying £1bn in loans to transition existing real estate.

Aviva Investors has loaned £50 million ($69 million; €59 million) to London-listed storage company Big Yellow Group with an ESG-linked margin. This is the latest deal from the London-based insurance company’s sustainable transition real estate loans facility, which was launched in December 2020 to originate £1 billion in loans with margins linked to decarbonisation targets in real estate by 2030.

Big Yellow Group will receive margin discounts if it meets decarbonisation KPIs, such as installing solar panels in its properties and progressing towards its target to become net renewable energy positive by 2030.

Aviva’s focus is on transitioning assets that already exist rather than investing in newer, ESG-compliant buildings, Stanley Kwong, ESG and impact lead for Aviva’s real assets strategy, told a panel at affiliate title PERE’s Debt and Financing forum last month. “The real challenge lies in how to match those ESG targets to incentives, which also protects the ESG risk that you [the lender] have assessed through your ESG integration process,” Kwong said.