To help promote sustainability and climate smart commercial real estate in South Africa, the International Finance Corporation (IFC) and Redefine Properties have announced they will issue a green bond, with the IFC as the anchor investor. Redefine will use the bond’s proceeds to improve the environmental sustainability of buildings in its portfolio.
The IFC will invest up to R750m (about $44.1m) in the bond to help Redefine reduce energy and water consumption and make other positive environmental improvements in its commercial property portfolio, including office, retail, and industrial space.
The green bond, Redefine’s first, was oversubscribed and raised R1.5bn at an auction on September 16 2022.
The real estate sector is estimated to generate about 40% of the world’s CO2 emissions, according to research by the bond issuers. Redefine, South Africa’s second largest real estate investment trust (Reit), will use the green bond to support the long-term decarbonisation of its buildings, which house more than 4 000 tenants and employ more than 195 000 people.
“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 Redefine CFO, Ntobeko Nyawo.
“This green bond diversifies our funding portfolio and amplifies our commitment to placing ESG at the heart of what we do,” he said.
“IFC’s partnership with Redefine is in line with our strategy to support climate smart infrastructure projects in South Africa’s real estate sector,” said Adamou Labara, the IFC’s Country Manager for South Africa.
“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,” he said.
The green bond, the second issued by a Reit in South Africa, aligns with Redefine’s sustainability goals to transform its properties into environmentally sustainable and resource efficient assets. The company has established a long-term target to achieve net zero carbon status by 2050.
The green bond also 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.
The IFC’s investment will be used exclusively to refinance existing green buildings with a Green Star 4 category certification, which is a tool used to rate the environmental impact of buildings, as defined by the Green Building Council of South Africa or equivalents.
Picture supplied by Redefine Properties.
Front from Left – Olaf Schmidt, Investment manager (IFC); Anelisa Keke, Chief sustainability officer (Redefine); Andrew Konig, Chief executive officer (Redefine)
Back from left – Lesley Baerveldt, Head of corporate finance (Redefine); Ejiro O. Agbeyi, Investment officer (IFC); Ken Osei, Principal investment officer (IFC); Ntobeko Nyawo, Chief financial officer (Redefine)