JSE-listed real estate investment trust Growthpoint Properties has issued a Green Bond on the JSE, the first local company to do so.
The Growthpoint Green Bonds will be available in terms of five, seven and ten years and are aimed at raising capital solely allocated for funding projects that result in positive environmental and climate benefits.
The R1.1-billion Green Bonds would be used to fund the company’s green buildings and green initiatives and form part of Growthpoint’s R20-billion domestic medium-term note programme.
It will mainly be used to refinance funding for the green office buildings in the new Growthpoint Thrive portfolio and specifically the Thrive Platinum portfolio, which includes its top green-rated office properties.
In addition, suitable industrial and retail properties with four-star Green Star ratings or higher will also be eligible. Environmental projects related to Growthpoint’s buildings that have positive environmental impacts, such as solar energy projects, will also qualify for Green Bond funds.
Growthpoint has a national scale Aaa.za Moody’s rating, with many banks opting to hold Growthpoint paper as high-quality liquid assets.
The Green Bonds were priced at 139 basis points for the five-year term, at 169 basis points for the seven-year term and at 200 basis points for the ten-year term above the three-month Johannesburg Interbank Agreed Rate.
The bond auction took place on March 6, and is believed to be the first public auction in South Africa for a ten-year bond for a real estate company.
The Growthpoint Green Bonds constitute green instruments falling within the Green Bond principles of the real estate sector and the green segment of the JSE’s interest rate market.
JSE capital markets director Donna Nemer noted that the JSE was proud to welcome Growthpoint Properties to the Green Bond segment.
“Growthpoint’s successful inaugural Green Bond proves there are benefits in committing to promoting South Africa’s climate-resilient future, as well as for being at the forefront of the financial sector’s response to the investment challenges posed by climate change.
“Growthpoint is laying new foundations for the capital flows needed to achieve the commitments within the South African context for securing investments and jobs in future and is to be greatly congratulated for this.”
Growthpoint Properties CEO Norbert Sasse added that the company’s inaugural Green Bonds linked its sustainable developments and green buildings with capital markets.
“This gives investors a unique opportunity to participate in supporting greater environmental sustainability and climate change mitigation and enables them to evaluate the environmental impact of their investment. We intend to continue to be a catalyst for a more sustainable property sector.”
Among the investors in the new Growthpoint Green Bonds is the African Local Currency Bond Fund (ALCB Fund), an initiative of KfW Development Bank and the German government backed by additional investors. It aims to promote the development of African capital markets by acting as an anchor investor in primary bond issuance. It has invested around $70-million since inception in 13 countries.
In addition to anchor investments, the ALCB Fund offers technical assistance to cover transaction-related costs, including compliance with international Green Bond standards.