QTS Realty Trust, LLC Green Finance Framework – BX 2023-VLT3 CMBS Second-Party Opinion (2023)

Project Details

Project

Client

Quality Technology Services Realty Trust

Project Type

Green Bond/Loan

Industry Group

Real Estate

Use of Proceeds

Energy efficiency

Location

U.S.

Evaluation Date

Oct 2023

Evaluation Summary

Sustainalytics is of the opinion that the QTS Realty Trust, LLC Green Finance Framework – BX 2023-VLT3 CMBS is credible and impactful and aligns with the four core components of the Green Bond Principles 2021 and the Green Loan Principles 2023. This assessment is based on the following:

USE OF PROCEEDS

The eligible category for the use of proceeds, Energy and Resource Efficiency, is aligned with those recognized by the Green Bond Principles and the Green Loan Principles. Sustainalytics considers that investments in the eligible category will lead to positive environmental impacts and advance the UN Sustainable Development Goals, specifically SDG 7.

PROECT EVALUATION AND SELECTION

QTS Phoenix has selected a newly constructed data centre property located in Phoenix, Arizona

(the Mortgaged Property), in accordance with the eligibility criteria under the Framework, and evaluated the characteristics of the Mortgaged Property against available benchmarks and industry best practices applicable to the design, construction and completion of data centres. QTS Phoenix has mandated subject matter experts to

evaluate the environmental and social risks associated with the Project and implement related mitigation measures as needed. The Borrower has communicated that it will provide a property condition report to lenders prior to the loan closing date, identifying the Project’s environmental and social risks and compliance with the Equator Principles. Sustainalytics considers the project selection process in line with market practice.

MANAGEMENT OF PROCEEDS

The proceeds from the issuance will be exclusively used to purchase the mortgage loan to refinance the Mortgaged Property. Proceeds will be immediately allocated after the issuance with no flexibility to re-allocate. This is in line with market practice.

REPORTING

Citigroup Commercial Mortgage Securities Inc., the Depositor, commits to providing investors with a description of the Mortgaged Property and the details of its sustainability features, including the PUE ratio of less than 1.50, as part of the initial offering document. Given the intent to immediately allocate the proceeds to purchase the mortgage loan and refinance the eligible asset, Sustainalytics views QTS Phoenix’s allocation and impact reporting as aligned with market practice.