Puma launches initiative to incentivise social and sustainable development

The Impact Loan offers up to a one per cent fee reduction of the value of the loan if developments meet certain criteria. 

The reward is given based on the project being delivered, and the development will be independently verified by a third party. 

This incentive will be available on all its products and apply to all residential and commercial developments. 

To meet sustainability requirements, Puma Property Finance has partnered with real estate firm JLL to verify residential developments against its NextGeneration Project criteria and global verification firm Sintali to assess commercial projects against the International Finance Corporation (IFC) EDGE criteria. 

The EDGE app also has modelling software that can inform developers of steps they can take to improve efficiency. 

Standards to be met 

For residential projects, sustainability criteria include a minimum energy performance certificate (EPC) rating of E for all units, while commercial developments must achieve the EDGE certification. 

The social impact criteria for residential include at least 50 per cent of units classified as affordable housing, and the project being in an area of deprivation. Commercial projects must be in an area that meets the standard for deprivation to be considered as having a social impact. 

The borrower must cover the cost of external verification, but Puma can provide this within the loan facility. 

An application for the incentive can be made at any time up until a loan is completed. 

A fee reduction of up to 0.5 per cent is available for developments that meet the social impact criteria, and 0.5 per cent or one per cent for sustainability criteria, depending on the standard met. 

The NextGeneration Silver rating for sustainability will result in a 0.5 per cent reduction, while the Gold rating will mean a one per cent cut.  

The EDGE Certified standard, which gives developments a minimum score of 20 per cent, will lead to a 0.5 per cent cut, while the Advanced standard, which represents a minimum score of 40 per cent, will result in a one per cent reduction. 

Borrowers can receive the incentive either under the social impact category or sustainability, not both, and it is up to the borrower to decide which incentive to apply for. 

Driving impactful change 

Paul Frost, managing director of Puma Property Finance, said the Impact Loan was about “driving impactful change in a way that’s authentic, accessible and affordable”. 

The incentive will be funded by Puma Property Finance. 

Frost added: “We are immensely proud to be launching our Impact Lending Framework, which is the culmination of many months of thought and consultation and follows our University College London partnership that we announced last year. 

“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 actually deliver, not just aspire to deliver, impactful projects. It utilises independent, industry-accredited criteria with external, third-party verification from global leaders in their field. 

“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.”  

Sarah Milne, senior manager at Puma Property Finance, said its appetite for deals remained unchanged and the loan was to encourage borrowers. 

“We would expect our borrowers to say ‘I think we can do this, I can make those tiny changes’. Even in the last 12 months, the drivers from the investment market are really impacting what our borrowers are looking at,” she added. 

Milne said she expected more of this activity in the next 18 months. 

She said there was a barrier to entry for some developers as costs could amount to a “huge sum” and not all saw the benefit of being sustainable. 

Frost said the incentive would reward developers already working with a sustainable or social goal and would encourage others who fell just outside criteria to consider doing the same. He said there was potential for the initiative to evolve over time, which would be dependent on its performance. 

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 Property Finance 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, EMEA head of ESG strategy at JLL, said: “Puma’s Impact Lending Framework is a welcome means for encouraging UK developers to deliver projects that are good for people and the planet.  

“Based on over 20 years of experience benchmarking sustainability best practice in homebuilding through the NextGeneration Initiative, NextGeneration Project provides a succinct, holistic set of criteria for demonstrating sustainability performance. We very much look forward to working closely with Puma Property Finance and their clients.”