Case study

Landsec’s debut green bond highlights real estate firm’s focus on net-zero

31 Mar 2023 . 3 min read

Shaping successful future cities

Land Securities Capital Markets (Landsec) is one of the largest real estate companies in Europe, with a £10.9 billion portfolio of retail, leisure, workspace and residential hubs spanning 24 million square feet, with 61% of its properties, by value, in Central London.

To fulfil the company’s purpose to build and invest in buildings, spaces and partnerships to create sustainable places, connect communities and realise potential, Landsec has built its sustainability strategy on three pillars:

1) ‘Build well’, which focuses on the reduction of scope 1, 2 and 3 emissions by 47% by 2030 and to become net-zero by 2040. Landsec also aims to reduce average embodied carbon by 50% compared to a typical building by 2030;

2) ‘Live well’ reflects Landsec’s role in helping build a fairer, more inclusive economy as a significant creator of jobs across real estate, construction, customer service and retail. Landsec have committed to investing £20m in a fund that will enhance social mobility with an aim to empower 30,000 people towards the world of work, creating £200 million of social value by 2030.

3) ‘Act well’, encompasses Landsec’s drive to embed sustainability throughout the business building strong relationships with partners, customers, suppliers, communities and colleagues.

Launched in November 2019, Landsec updated its Green Financing Framework in March 2023 to align with the latest versions of the ICMA Green Bond Principles 2021 and the LMA Green Loan Principles 2023, as well as take into consideration the EU Taxonomy and the EU Taxonomy Delegated Acts on Climate Change Mitigation and Adaptation.

Strong investor demand confirms appetite for green debt from the real estate sector

Looking to return to the sterling market, having last issued a £350 million senior benchmark in March 2018, Landsec asked NatWest to support the company’s first green issuance in the role of Active Bookrunner – NatWest’s third, consecutive transaction for the real estate firm.

After the announcement of a 9.5-year debut Green Bond, Landsec engaged with the majority of the GBP buyer base in virtual and in-person meetings. Investors welcomed this direct dialogue, and the positive reception translated into strong demand when books opened.

Given the strong demand, Landsec were able to print towards the upper end of their expectations, opting for a size of £400 million. The bond will pay an annual coupon of 4.875%.

Real estate firms such as Landsec can play a pioneering role in the transition to net-zero

Vanessa Simms, CFO, Landsec, commented: “Issuing our first green bond is an important milestone for us, linking our leading sustainable credentials with our financial instruments. We have been working hard over the years to reduce our environmental impact and continue to do so with the aim to become net-zero by 2040. We thank NatWest for their excellent guidance for our green bond debut. They were on hand and provided timely advice when needed, making this a very positive process overall.”

Sunil Kainth, NatWest, said: “We’re delighted to have been able to support our customer, Landsec, with their hugely successful debut in the sustainable finance market. This transaction demonstrates the pioneering role the real estate sector can play in the transition to a low carbon and greener economy. Advising our customer on this transaction is another example of our commitment to act as a sustainable, purpose-led bank that champions the communities we serve and helps them to thrive, as well as supports companies such as Landsec on their journey to net-zero.”

Dean Shahfar, NatWest added: “We are delighted to have supported Landsec with their first green bond issuance. 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 40% of the global carbon footprint.”

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