SOUTH AFRICA – International Financial Corporation (IFC) and Redefine Properties Ltd., a leading South African-based Real Estate Investment Trust (REIT) announced the issuance of a green bond, with IFC as anchor investor, to help promote sustainability and climate-smart commercial real estate in South Africa.
IFC will invest up to ZAR750 million (US$44.1 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 real estate sector is estimated to generate about 40 percent of the world’s CO2 emissions. Redefine, South Africa’s second largest real estate investment trust (REIT), will use the green bond to support the long-term decarbonization 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.”
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.
“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, 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.”
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 the equivalent.
These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.