ESG Case Study - Fortitude Valley

Woodbridge is pleased to share an ESG case study for one of our existing loans in the portfolio.

What?

A mixed-use asset comprising retail and commercial tenants located in Brisbane’s Fortitude Valley.

How?

Woodbridge began discussions with the borrower around their value-add strategy and subsequently provided acquisition funding to the borrower.

Initially the borrower’s short-term strategy was to negotiate higher rental income including CPI linked increases and longer lease terms with the existing tenants. During these discussions we began our engagement with the borrower on potential ESG risks and opportunities for the asset.

Upon an inspection of the asset during due diligence we discovered the building had an extensive rooftop that was vacant and easily accessible. We then made the initial suggestion to the borrower to install solar panels on the rooftop to improve the buildings ESG credentials and subsequently increase rental income and building value.

Positive Outcomes

The borrower in the first six months of the loan successfully executed on their short-term strategy, improved the buildings value, and reduced our loan to value ratio.

Despite the initial value improvements, we continued our engagement with the borrower for rooftop solar. In a positive update, the borrower late last year was able to secure higher rental income through a lease amendment because of the provision of rooftop solar.

The addition of rooftop solar will improve the buildings ESG credentials through lowering the buildings carbon emissions. The improved ESG credentials and higher rental income achieved have also improved the buildings value and lowered our loan to value ratio.