Enhancing nature while building communities
Established in 1976, today The Berkeley Group is one of the five largest homebuilders by revenue in the UK, delivering high quality homes and developments across London, Birmingham and the South-East of England.
A leading regeneration developer, Berkeley specialises in large-scale long-term brownfield regeneration projects, focusing on challenging and complex sites that are beyond the scope of conventional homebuilders. The group works with councils and communities to create a shared vision and to unlock a mix of social, environmental, economic and commercial value that benefits all stakeholders.
Being awarded Sustainable Housebuilder of the Year in 2020 for the second consecutive year, sustainability is deeply embedded within the company and is integrated into its core business strategy “Our Vision”, which sets out Berkeley’s purpose to create homes, strengthen communities and improve people’s lives, and details its commitment to climate action. Amongst other achievements, Berkeley were the first developer to commit to biodiversity net gain - each of its project team ensures there will be more nature after each development than before. So far, the group has committed to creating or improving an area larger than London’s Hyde Park across 40 sites.
Earlier this year, Berkeley developed a Green Bond Framework under which it can raise proceeds to support the financing of Eligible Green Assets which will be grouped under the “Green Development Pool”. Debt will be used to fund investment into developments that will have a positive environmental and social impact. DNV Business Assurance Services provided a Second Party Opinion, confirming that the Framework aligns with the International Capital Market Association (“ICMA”) Green Bond Principles 2021 and contributes to the UN Sustainable Development Goals (SDGs) No 8 “Decent work and economic growth”, No 11 “Sustainable Cities and Communities”, No 12 “Responsible Resource Use” and No 13 “Climate Action”.
Green Bond to finance energy efficient homes on brownfield land
Following the publication of the Group’s Green Bond Framework, Berkeley, who achieved an investment grade rating of BBB- from Fitch, turned to NatWest to support them in the role as active bookrunner with their inaugural public bond issue, choosing a ‘green format’ for this debut into the Sterling market and opting to issue a £400 million Green Bond with a 10-year maturity and a coupon of 2.5%.
To present its sustainability story and Green Bond Framework in detail, as well as its credit story, Berkeley spoke to investors during a 2-day roadshow, which included a global investor call and 1-on-1 meetings. Berkeley’s strong ESG and credit credentials in a cyclical industry generated good demand and resulted in an orderbook with subscriptions from over 130 investors and a volume of over £2 billion.
The bond proceeds will support Berkeley in bringing forward 29 of the most complex and challenging regeneration sites in the country. These projects include vast neglected spaces, such as disused gasworks or industrial estates, which offer little social value to the communities around them. These sites are being carefully remediated and transformed into unique places, with a mix of homes and community amenities.
Berkeley’s green bond Framework uses a single project category - a different approach from the typically 5+ project categories - following the company’s unique development business model focusing on the regeneration of urban brownfield land.
Making a real difference towards Net Zero
Sunil Kainth, Debt & Financing Solutions, NatWest, commented: “We are thrilled about Berkeley Group’s successful green debut, which is another sign of the pace of progress in the real estate sector. This transaction also demonstrates the pioneering role the housebuilding sector can play in the transition to a low carbon and greener economy, and it has established Berkeley firmly in the public market as a green issuer with a strong credit and sustainability story.”
Dr Arthur Krebbers, Head of Sustainable Finance, Corporates at NatWest, added: “We are delighted to have supported Berkeley Group with their first green bonds issuance, one of the first from the UK housebuilding sector. It’s a very encouraging sign to see growth of the UK sustainable finance market through new issuers such as, and in particular, in the real estate sector, a sector that is responsible for around 30% of the global carbon footprint. Companies such as The Berkeley Group are making a real difference, and we’re committed at NatWest to help them on their sustainability journey.”
Richard Stearn, Chief Financial Officer, Berkeley Group, said: "We have been delighted by the strength of institutional demand for our debut issue of green bonds. This demonstrates that investors recognise the resilience of Berkeley's unique long-term operating model and, through our new Green Bond Framework, the value to the wider environment of our regeneration activities. It takes many years of patient place-making to stitch these vast spaces, once cut off from their local communities, back into the local fabric, and bring them to life with the right mix of homes, public amenities, parks and open spaces. This is inherently sustainable and relieves pressure on greenfield land.”
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