JSE-listed real estate investment trust (Reit) Fortress Reit has launched R900-million in sustainability-linked bonds, aligned to its ongoing strategic environmental, social and governance plan to scale up its renewable energy generation for its own use and potentially also for sale to the grid in future.
The JSE has granted Fortress the listing of a three-year sustainability-linked bond of R495-million and a five-year sustainability-linked note of R405-million.
Although the bonds do not have specific use-of-proceed requirements, the funds will assist Fortress with the continued installation and increase of solar energy in South Africa, across its retail and logistics portfolios, the Reit says.
It notes that this will allow its real estate assets to meet its targets for solar energy, facilitate a reduction in reliance on utilities, reduce its carbon footprint and contribute to mitigating climate change.
The key feature of this note is the linking of Fortress’ cost of funding to pre-agreed sustainability performance targets, which will unlock a lower cost of funding, should all these targets be met, the company highlights.
“The target measurement dates for the five-year note are June 30, 2022, and June 30, 2024. Fortress has committed to increasing its renewable energy installations and megawatt outputs.
“The renewable energy target will be achieved through an increase in solar energy installed measured in megawatt with respect to the South African portion of its portfolio.
“The target is for a 2.2 MW increase at the first target date in June 2022 and then a further 3.6 MW in June 2024 resulting in a cumulative 5.8 MW installation,” informs Fortress CFO Ian Vorster.
This will be added to Fortress’s existing solar energy infrastructure, which has a generation capacity of nearly 4.74 MW from ten installations.