Development finance institution the International Finance Corporation (IFC) is the anchor investor of real estate investment trust Redefine Properties' green bond, which aims to promote sustainability and climate-smart commercial real estate in South Africa.
Redefine will use the bond’s proceeds to improve the environmental sustainability of eligible buildings in its portfolio.
The IFC will invest up to R750-million 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, which is Redefine’s first, was oversubscribed and raised R1.5-billion at an auction on September 16.
The real estate sector is estimated to generate about 40% of the world’s carbon dioxide emissions. Redefine will use the green bond to support the long-term decarbonisation of its buildings.
The IFC’s investment will be used exclusively to refinance existing green buildings with a Green Star four-star category certification, which is a tool used to rate the environmental impact of buildings, as defined by the Green Building Council South Africa or the equivalent.
“This green bond diversifies our funding portfolio and amplifies our commitment to placing environmental, social and governance at the heart of what we do.
"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,” says Redefine CFO Ntobeko Nyawo.
“IFC’s partnership with Redefine is in line with our strategy to support climate-smart infrastructure projects in South Africa’s 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,” says IFC country manager for South Africa Adamou Labara.
The green bond, the second issued by a real estate investment trust 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 JSE in the Sustainability Segment, which is a platform for companies to raise debt for green, social and sustainable initiatives.