Real estate firm Lango has appointed Rand Merchant Bank (RMB) to act as sole sustainability adviser and coordinator for its first $325-million sustainability-linked financing package, which is jointly funded with Standard Bank.
This marks one of the largest sustainability-linked loans implemented in Africa to date.
Lango owns a diversified, and growing, portfolio worth more than $600-million, comprising of commercial assets in Ghana, Nigeria, Zambia and Angola.
RMB, which has a minority shareholding in Lango, has acted as a funding partner for the real estate company since its inception and has aligned interests with Lango in terms of its sustainability strategy.
“The generation of compelling and sustainable investor returns through the acquisition of prime commercial real estate assets in key gateway cities across Africa is central to Lango’s business model.
“Lango has recognised that to promote growth and secure the long-term sustainability and longevity of its assets, a sustainability strategy in line with international best practice is required,” the company states.
RMB has been supporting Lango’s establishment of a holistic sustainable finance framework that considers use of proceeds loans, such as green and social loans, and sustainability-linked loans.
The development of this framework is a significant milestone for Lango in its sustainability journey, as it integrates Lango’s financial strategy and sustainability goals, while enhancing sustainability reporting.
The framework has key performance indicators including increased use of renewable energy sources, green-certified buildings and more gender diversity.
For example, the renewable energy that is expected to be installed over the period of the sustainability-linked loan is anticipated to equate to the power requirement for about 2 437 homes. Lango will also aim to achieve 20% improvements in energy, water and embodied energy in materials in most of its buildings by 2025.
“The implementation of a sustainable finance framework not only allows Lango to take a leading role in furthering the sustainability agenda in Africa, but also allows Lango the opportunity to credibly tap the impact-related financial markets internationally in order to secure additional growth capital,” Lango CEO Thomas Reilly explains.
He adds that the real estate sector has a significant environmental footprint in terms of energy consumption, greenhouse-gas emissions, and waste generation.
In support of the United Nations Sustainable Development Goals, it has become important for funders internationally to financially incentivise real estate developers and investors to prioritise environment-friendly practices such as renewable energy adoption and sustainable construction practices.
Not only can this help to mitigate climate change, but it also enhances the long-term value and marketability of real estate assets.