Puma launches framework to provide 'impactful' developers with financial incentives

Puma Property Finance has announced the launch of its Impact Lending Framework, established to provide up to a 1% reduction on the total loan amount provided to property developers who are implementing measures in their designs that deliver impactful change.

The framework sets out criteria under which prospective development projects can qualify as an impact loan.

The criteria have been designed to make use of industry-accredited measures, which will be subject to external, third-party verification.

Qualification as an Impact Loan will provide direct and tangible financial benefits to borrowers in the form of a fee reduction on final repayment of the loan.

Borrowers will receive either 0.5% or 1.0% of the total drawn loan amount as a fee reduction, and loans will qualify under two sets of criteria.

Its sustainability criteria have been designed to encourage the adoption of sustainable methods of construction, and thoughtful design to encourage efficient long-term building usage.

The social impact criteria have been designed to encourage investment into areas of higher deprivation or to support the provision of increased affordable housing.

Developments in the build-to-sell, BTR, co-living and retirement living sectors will fall within the scope of the residential framework.

Developments in all other sectors will fall within the commercial framework.

To receive the financial benefit of the framework, residential loans must comprise a minimum EPC B rating for all units and a minimum silver rating under NextGeneration Project criteria (additional benefit for achieving gold rating).

Commercial loans must attain EDGE certificate level (additional benefit for achieving EDGE advanced level).

Loans achieving the minimum criteria will qualify for a fee reduction equal to 0.5% of the total drawn loan, payable following the full repayment of the loan.

For loans meeting the higher level of assessment under NextGeneration Project or EDGE, the fee reduction will increase to 1.0% of the total drawn loan.

The social impact criteria are based on the locality of the proposed development, with projects qualifying if — at the time of loan approval — they are located within local authority wards in the top three deciles of deprivation, according to independent government statistics.

For residential loans, an alternative means of qualification applies where a minimum of 50% of units will be classified as affordable housing.

Loans achieving the minimum criteria above will qualify for a fee reduction equal to 0.5% of the total drawn loan. 

In order to ensure objective application of the framework, Puma has partnered with independent third parties JLL and Sintali.

Paul Frost, managing director at Puma (pictured above), commented: “We are immensely proud to be launching our Impact Lending Framework, which is the culmination of many months of thought and consultation.

“We take both our environmental and social responsibilities seriously at Puma and believe property lenders are uniquely placed to incentivise the adoption of more sustainable and impactful practices within the built environment.

“The new framework has been carefully designed to reward developers who deliver, not just aspire to deliver, impactful projects. 

“This framework is our next step towards moving the dial and we sincerely hope it will be the encouragement developers and other lenders need to take that next step too.”

Eleni Polychroniadou, co-founder of Sintali, said: “EDGE was designed by IFC to transform the global real estate market and make green buildings available to everyone.

“It is encouraging to see lenders such as Puma embracing this mission and supporting the UK market in accelerating the decarbonisation of the built environment.

“With a focus on quantitative results and a reduction in greenhouse gas emissions, EDGE brings value to businesses and to the environment, and paired with the financial incentive from the Impact Framework, creates a win-win opportunity for all.”

Claire Racine, director of EMEA Head of ESG Strategy at JLL, concluded: “Puma’s framework is a welcome means for encouraging UK developers to deliver projects that are good for people and the planet.

“NextGeneration Project provides a succinct, holistic set of criteria for demonstrating sustainability performance.

“We very much look forward to working closely with Puma and its clients.”

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