Debt Funding

The ARC Fund has a well-diversified funding structure, consisting of a combination of secured and unsecured bank debt, an unsecured U.S. private placement (USPP) and unsecured green bonds. The ARC Fund has the ability to attract different debt funding instruments at any point in time. In 2024, the ARC Fund successfully obtained a Baa2 corporate credit rating with a positive outlook from Moody’s, which reflects the ARC Fund’s investment-grade credit profile. This rating was reaffirmed on 28 May 2025 and upgraded to Baa1 with a stable outlook on 9 January 2026.

Since 2022, the ARC Fund undertook various steps to implement its debt strategy to transition from solely mortgage bank debt towards a more diversified and predominantly unsecured financing structure. In 2022, the ARC Fund successfully arranged an unsecured sustainability-linked Revolving Credit Facility (RCF). This transaction was followed by attracting an unsecured Private Placement in 2023 and by issuing ARC Fund’s first green bond in 2024. The ARC Fund successfully executed its second bond issuance in June 2025. The green bonds were issued under ARC Fund’s Euro Medium Term Notes (EMTN) Programme and in accordance with the ARC Fund’s Sustainable Finance Framework. This Framework was established in 2024 and highlights the ARC Fund’s focus on sustainability and affordability. The Second Party Opinion of the Sustainable Finance Framework was provided by Sustainalytics. 

Following these transactions, the ARC Fund has successfully completed its transition towards a more diversified and predominantly unsecured financing structure. All upcoming refinancing obligations are addressed until 2029. Proceeds from the 2025 green bond issuance were used to repay €325 million of secured term loans maturing in December 2025 and January 2026. This led to a reduction of mortgage encumbrance on part of the ARC Fund’s property portfolio. As of year-end 2025, the ARC Fund has a weighted average length of debt of 4.2 years, and 29% percent of drawn debt is secured by mortgages.

The loan-to-value ratio decreased to 21.4% at year-end 2025, compared to 23.2% at year-end 2024. Per year-end 2025, the €450 million revolving credit facility was fully undrawn, underpinning the ARC Fund’s strong funding position and capacity to finance its development pipeline and other investments.

The ARC Fund’s average cost of debt remained stable at 2.9% in 2025 (2024: 2.9%). While the green bonds introduced higher fixed coupon rates, this upward pressure was offset by a lower utilisation of higher-cost variable-rate debt, resulting in a stable average cost of debt. The interest cover ratio decreased to 3.6 at year-end 2025, compared with 4.0 at year-end 2024, which remains well above the 1.8 interest cover ratio covenant level.

Our overall debt funding strategy is centred around the following targets for its debt profile:

• Maintain a loan-to-value ratio of ≤ 30%;

• Manage interest rate risk by setting total fixed-rate and hedged floating rate exposure to ≥ 65%;

• Manage refinancing risk by maintaining a well-distributed maturity schedule;

• Implement a diversified funding profile with at least three different funding sources;

• Maintain a diversified funding profile with at least three different funding sources;

• Ensure sufficient liquidity headroom: to refinance debt, finance committed pipeline, and other committed obligations over a minimum 18-month forward-looking period;

• Maintain  asset encumbrance to a level of ≤ 20% of total assets for the long term.

Debt maturity schedule

ARC Fund’s funding arrangements, as part of its financing agreements, are a maximum loan-to-value ratio of 40% and a minimum interest cover ratio of 1.8. We comfortably met all the financial covenants of our financing arrangements in 2025. The ARC Fund is committed to implementing and maintaining a resilient debt funding structure, with minimal refinancing risk and interest rate exposure risk, while at the same time striving for a favourable average cost of debt.

The information below is provided for explanatory purposes with regard to the ARC Fund’s’ long-term funding.

ARC Fund obtains its debt funding through various sources:

1. Bank facilities, comprising corporate unsecured and secured bank funding provided by banks

2. An unsecured U.S. Private Placement

3. Two green bonds, issued under the EMTN-programme.

Debt portfolio overview as at the 31 December 2025

* Depending on loan-to-mortgage-value ratio; ** Depending on loan-to-mortgage-value ratio and ESG KPI's.                                                                                                                                                                                                                                                                                                                                                                                                                                                              

1) Bank facilities

The ARC Fund currently has two bank facilities in place for a total amount of €750 million.

A €300 million secured loan facility is provided by a banking consortium of two banks, consisting of ING Bank N.V., acting as Facility Agent, and Deutsche Hypotheken Bank AG, acting as Valuation and Security Agent. The ARC Fund granted security to its lenders under this loan facility. As of 31 December 2025, €713 million of the investment portfolio was secured under this facility, which equals an LTMV ratio of 42.1%.

Up until 17 January 2026, the interest rate of the facility is determined as follows:

• €290 million: 1.218% - 1.318% (depending on the LTMV ratio);

• €60 million: 1.596% - 1.696% (depending on the LTMV ratio); and

• €150 million: 1.733% - 1.833% (depending on the LTMV ratio).

After 17 January 2026, the interest rate of the secured loan facility ranges between 3.55% to 3.65%, depending on the LTMV ratio. 

The ARC Fund also has a €450 million sustainability-linked unsecured revolving credit facility (RCF) in place. This facility is provided by a banking consortium consisting of ABN AMRO Bank N.V., BNP Paribas S.A., ING Bank N.V. acting as Facility Agent and SMBC Bank EU A.G. The sustainability-linked RCF of €450 million matures in July, 2029. At year-end 2025, the facility was fully undrawn.

Pricing of the RCF is calculated by adding together the 3-month EURIBOR, the applicable margin and the applicable margin adjustment related to the ARC Fund’s sustainability performance. The applicable margin is subject to a margin grid, whereby an LTV equal to or below 20% equates to a margin of 0.80%; an LTV higher than 20% and equal to or lower than 25% equates to a margin of 0.95%; and an LTV higher than 25% equates to a margin of 1.10%. 

The sustainability performance of the ARC Fund is measured with three KPIs. In 2025, the ARC Fund met 3 out of 3 KPIs; this means that the ARC Fund obtains a 0.05% reduction in the interest margin. Interest is paid on the drawn amount of the RCF on a quarterly basis. A commitment fee is payable on the undrawn amount of the facility. The commitment fee is 35% of the applicable margin.

Utilised commitments less than 33.3% equates to a utilisation fee of 0.10%, and utilised commitments exceeding 33.3% but less or equal to 66.7% equate to a utilisation fee of 0.20%. Utilised commitments exceeding 66.7% equate to a utilisation fee of 0.30%.

2) Unsecured US Private Placements

The ARC Fund has a €135 million unsecured USPP facility, which is provided by an investor consortium consisting of The Manufacturers Life Insurance Company, Metropolitan Life Insurance Company and New York Life Insurance Company. The USPP consists of two tranches: a €100 million tranche with a fixed coupon of 5.19% and a €35 million tranche with a fixed coupon of 5.09%. The interest is payable on a semi-annual basis. The notes are due on 8 November 2030.  

3) Bonds

On 25 September 2024, the ARC Fund made its debut on the international capital markets by successfully issuing a €300 million green bond. The green bond has a long-term Baa2 issuer rating from Moody’s, a term of 5.5 years, a coupon of 3.875% and is listed on Euronext Dublin. The first interest on this green bond is semi-annual and was paid on 25 March 2025. Thereafter, the coupon is paid annually on the 25^th of March. The notes of the green bonds issued in 2024 are due on 25 March 2030.

On 11 June 2025, the ARC Fund issued its second green bond. The green bond has a nominal amount of €300 million, a long-term Baa2 issuer rating from Moody’s, a tenor of six years, a coupon of 3.75% and is listed on Euronext Dublin. Interest is paid annually every 11^th of June. The notes of the green bonds issued in 2025 are due on 11 June 2031.

The notes are tradeable on the secondary market. The proceeds of the green bond are used to finance eligible assets as defined in the ARC Fund’s newly established Sustainable Finance Framework. The green bonds were issued under the ARC Fund’s €1.5 billion EMTN Programme, which was set-up in 2024. A supplement was added to the EMTN Programme for the bond issue in 2025.

The first interest on the green bond is semi-annual and was payable on the 25th of March, 2025. Thereafter, the coupon is paid annually every 25th of March. The notes of the green bonds are due on 25 September, 2030.