South Africa’s second largest Real Estate Investment Trust (REIT) has issued an already oversubscribed green bond to fund decarbonisation of its commercial buildings.
Anchor investor IFC announced the issuance of the green bond which Redefine Properties will use to improve environmental sustainability of eligible buildings in its portfolio. IFC will invest up to R750 million (~$44.1m) in the bond to help Redefine reduce energy and water consumption, along with other improvements in its commercial property portfolio.
The green bond, Redefine’s first though the second by an REIT in South Africa, was oversubscribed and raised R1.5 billion at an auction in the middle of September.
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The real estate sector is estimated to generation around 40% of the world’s CO2 emissions. Of this, about 80% is produced by building operations, while the rest comes from the actual construction of the buildings. So, Redefine will use the green bond to support the long-term decarbonisations of its buildings. The REIT houses more than 4,000 tenants and employs more than 195,000 people.
This bond will be used exclusively to refinance green buildings with a Green Star 4 category certification. Green Star certification is a tool used to rate the environmental impact of buildings, as defined by the Green Building Council of South Africa or the equivalent.
Ntobeko Nyawo, Redefine Chief Financial Officer said the green bond not only diversifies their funding portfolio but amplifies their commitment to ESG. “Redefine will use the proceeds of this bond to finance only highly-rated green buildings, which is firmly in line with the company’s over-arching, long term climate-resilient framework,” said Nyawo.
The green bond aligns with the International Capital Market Association Green Bond Principles. It was listed on the Johannesburg Stock Exchange (JSE) in the Sustainability Segment, a platform for companies to raise debt for green, social, and sustainable initiatives.
Of reference
Green bonds can help raise finance to meet climate targets
Adamou Labara, IFC Country Manager for South Africa says their partnership with the REIT is in line with their strategy to support climate-smart infrastructure projects in the South African real estate sector.
“The green bond demonstrates the critical role that capital markets can play in crowding-in more investors for climate-focused financing. This will ultimately support South Africa’s aspirations to transition to a low-carbon economy,” said Labara.
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