ING supports Vonovia in issuing social and green bonds

Sustainable transactions have become an integral part of the capital market. A particularly successful project in the recent past saw Vonovia issue two social bonds and one green bond. These bonds demonstrate that Germany's largest real estate company is resolutely committed to sustainability, including when it comes to financing. Vonovia continues to lead the way in terms of social responsibility and sustainability in the sector.

Social bonds are on the rise

By issuing bonds totalling €2.5 billion, Vonovia is continuing to push forwards with its sustainable financing strategy. In March 2021, the company issued its first green bond, which attracted significant interest from investors. The social bonds are a way for the company to both expand its financing structure and integrate social components into its strategy. This move is in line with a more general trend: More and more companies are not only showing their interest in environmentally friendly projects, but are also looking for ways to incorporate their social responsibility goals into their financing strategies.

Bond proceeds totalling €1.65 billion to be invested in affordable housing

The two social bonds have terms of 3.85 and 6.25 years and amount to €850 million and €800 million respectively. The funds from these bonds will be used to finance affordable housing. This housing will include rental properties whose tenants have a social housing eligibility certificate or properties whose rent is 15 percent below the standard contractual rent for the area (in accordance with section 558 of the German Civil Code). For new buildings in the fraught Berlin housing market, the rent per square metre may not exceed €11 per month for the first occupants.

Energy-efficient buildings financed by green bonds

The green bond has a term of 10 years and its funds amount to €850 million — all of which will be specifically used to finance green properties. Vonovia has developed a very stringent set of criteria for these properties in the form of its Sustainable Finance Framework. One of these criteria is that new buildings completed after 2020 must at least meet the German KfW 55 standard. The bond proceeds will also be used to finance older buildings whose primary energy consumption has been reduced by at least 30% through modernisation of the building.

„Over many months of intensive cooperation, ING's pragmatic and solution-orientated way of working particularly impressed us.“  - Dr. Fabian Lander

 

How can banks support corporate sustainability efforts?

As one of the leading banks for sustainable financing, ING acted as Sustainability Structuring Advisor and Active Bookrunner for Vonovia during the transaction. Banks play a special role in this process as they can provide expertise and know-how of current market standards for sustainable bonds. Before the bonds were issued, ING provided Vonovia with comprehensive support, in particular for the further development of its Sustainable Finance Framework. This helped the company to create a basis for future bonds issued on the capital market. ING's responsibilities included creating wide-ranging investor communications. Head of Front Office — Finance & Treasury at Vonovia, Dr Fabian Lander, emphasises: "Over many months of intensive cooperation, ING's pragmatic and solution-orientated way of working particularly impressed us." 

The new framework has helped Vonovia to further develop its own criteria for future sustainable financing and is also in line with the European standard set out in the EU taxonomy. This underscores the company's sustainability goals and forms the basis for successfully issuing the three bonds. By providing consultancy services, ING is supporting Vonovia in its sustainable transformation process.