Driving Sustainability in Real Estate Financing

In March 2022, Niam Credit issued a senior secured loan to refinance Galleria Center Syd, a prominent shopping centre located in southern Sweden. Recognising the importance of sustainability and particularly energy efficiency initiatives, the loan was converted into a sustainability linked loan aimed at aligning the asset with EU Taxonomy criteria. Catalyst Capital, in collaboration with its local partner NCAP, conducted a thorough assessment of the shopping centre’s sustainability performance, leading to the development of an extensive strategy to improve energy performance.

Objectives with sustainability linked loan

The primary objective is to link the loan agreement to the borrower’s sustainability strategy to further incentivise energy efficiency measures and ultimately EU Taxonomy alignment of the asset. The environmental goal is to make a substantial contribution to climate change mitigation. This involves ensuring that Galleria Center Syd ranks among the top 15% in energy efficiency within its segment and to conduct a comprehensive climate risk assessment.

Improvements to be Implemented

Replacement of Roof and Installation of Solar Panels: Employing renewable energy to reduce dependency on traditional power sources
New Ventilation System: Enhancing indoor air quality and energy efficiency
Connection to District Heating: More efficient heating solution to reduce electricity use
Integration into a System Platform: Streamlining operations for enhanced efficiency and monitoring

We have welcomed the development of the EU Taxonomy as a classification tool, and with the amendment of this loan, we integrate the criteria in the context of sustainability-linked lending. This is a great step towards using the EU Taxonomy for financing the transition in the Real Estate sector.

Ulrika Lööf, Head of Sustainability at Niam Credit

Expected Outcome

Approximately 50% Reduced Energy Consumption: Significant reduction in energy usage for Galleria Center Syd's operations, excluding tenant energy usage
Energy Cost Decrease of Approx. SEK 4.6m per annum: Achieving substantial cost savings while driving sustainability efforts

We are grateful for Niam’s support on sustainability related upgrades at Galleria Center Syd. The ESG improvements are crucial to Catalyst Capital’s strategy for this property and our wider portfolio.

Kean Hird, Partner at Catalyst Capital

Thanks to the joint efforts of everyone involved, Galleria Center Syd undergoes significant sustainability improvements and can pave the way for future projects and financing initiatives.