Difference between “commercial real estate” loans and “corporate loan: commercial real estate”

Hi there,

According to p.41 of the ‘Financial Sector Science-based Targets Guidance (2022)’, ‘Real estate (commercial & residential)’ is considered as one of the asset classes. Also, p.125-126 says that the scope of the asset class ‘SDA for Commercial Real Estate’ is Real estate loans and investments (including REITs). Also, Real estate loans and investments are defined as the allocation of capital to finance the purchase of a property with a commercial purpose, including real estate investment trust (REIT), etc. However, on p.55-57, there is no such asset class that is relevant to real estate loan itself, but only ‘corporate loan: commercial real estate’ and ‘Investments in real estate investment trusts (REITs), listed real estate companies, and real estate mutual funds’.

It seems that the asset class ‘Commercial real estate’ and ‘Corporate loan: commercial real estate’ are different: ‘Commercial real estate’ loans and investments is defined as the allocation of capital to finance the purchase of a property with a commercial purpose, while ‘Corporate loan: commercial real estate’ is loans to real estate companies and this corporate loan itself is not relevant to a purchase of a property with a commercial purpose.

  1. For the asset class “commercial real estate”, can we set the SBT target that is relevant to commercial real estate loans that is differentiated from the ‘corporate loan: commercial real estate’?

The unit of minimum coverage is “m2” for “corporate loan: commercial real estate”. I have a question on this because the CRE corporate loan is for the company itself, where we do not need to know about its properties.

  1. Can we set SBT targets of “corporate loan: commercial real estate” using the unit “loan value”? If so, what will be the minimum coverage? Or does this mean the area (m2) of the properties the CRE company manage?

Best regards