Growthpoint Properties is the first South African company to issue a Green Bond on the Johannesburg Stock Exchange (JSE).
Green Bonds raise money that is specially allocated for funding projects that result in positive environmental and climate benefits. The R1.1 billion ($94 million) Green Bonds issued by Growthpoint will be used to fund the green buildings and green initiatives of South Africa’s leading REIT, the company said.
The bonds – for terms of five, seven and ten years – have been issued and listed on the JSE, and form part of Growthpoint’s R20 billion Domestic Medium Term Note (DMTN) Programme.
The Green Bonds are priced at 139 basis points (1.39%) for the five-year term, at 169 basis points (1.69%) for the seven-year term and at 200 basis points (2.00%) for the 10-year term above three-month Johannesburg Interbank Agreed Rate (JIBAR).
The bond auction took place on Tuesday, 6 March 2018, and is believed to be the first public auction in South Africa for a 10-year bond for a real estate company, it said.
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.
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.
The proceeds of the bonds will be used exclusively to finance or refinance Growthpoint’s new and existing sustainable green properties and its projects which reduce environmental impact.
It will be mainly 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. Buildings in this portfolio have a South African Property Owners Association (SAPOA) Premium- or A-grade rating.
They also have a Green Building Council of South Africa (GBCSA) Green Star SA rating of Four Stars or higher (design, as-built or existing building performance).
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.