Equites Property Fund has concluded a R2 billion debt, refinance, and upsize package with Standard Bank which comprises of an R800 million three-year sustainability-linked (SL) unsecured bond, a £50 million two-year SL loan (including a £25 million upsize), and a R221 million three-year loan.
The deal is the first pound sterling (GBP) denominated SL loan in the South African REIT sector and the first GBP denominated loan in South Africa with sustainability-linked features.
Lloyd Anderson, Manager: Real Estate Finance at Standard Bank says this restructure is very much a continuation to support Equites Property Fund in restructuring and investing in their maiden listed SL bond and “equally to further back them in their UK growth ambitions through the additional longer-term GBP SL funding”.
The environmental, social, and governance (ESG) commitments under the facilities are focused on sustainable building practices, increasing renewable energy usage, and promoting supplier enterprise development. Equites has committed to ensuring that all its new developments are green certified, that renewable energy consumption across its portfolio of high-grade logistics assets is increased each year, and to increasing its investment with enterprise and supplier development partners as part of Equites’ Ampcore programme.
Each KPI has two sustainability performance targets linking Equites’ all-in cost of debt to their performance in achieving material improvements in the various areas of the business. These initiatives are aligned with Equites’ strategy to ensure the sustainability of its portfolio and the environment in which it operates.
“As part of our focus on becoming a globally relevant REIT, Equites is dedicated to offering our tenants high-quality logistics assets built to extracting green standards and in assisting our tenants in their move towards renewable energy, with all renewable energy generated provided to the tenant at no cost” said Laila Razack, CFO of Equites Property Fund.
“The inclusion of a KPI that demonstrates our commitment to the social fabric of South Africa through the promotion of our Ampcore programme is clear evidence of the responsibility Equites has undertaken to the sustainable upliftment of black-owned SMMEs”.
Anneke Lund, Executive Sustainable Finance at Standard Bank says this transaction reaffirms their commitment to developing sustainable finance solutions as corporates and investors increase their focus on ESG considerations in supporting their communities and the environment.
“In working with Standard Bank on this transaction, we found a partner that understood our commitment to sustainability and with which we could collaborate in designing KPSs that will stretch the commitment of Equites in several spheres of sustainability – green certification of buildings, a rapid expansion of solar PV for our tenants to increase the reliance on renewable energy, and the upliftment of small enterprises through our Ampcore ESD programme” commented Warren Douglas, Head of Treasury at Equites. “The alignment of our long-term strategy of sustainability in both South Africa and the UK with our debt financing is imperative for Equites, and this transaction clearly demonstrates the commitment of Equites to ESG”.
ESG performance is both a financial and ethical priority and it is driving the equity investment agenda. Companies that operate in a sustainable manner tend to have lower risk profiles and outperform those that do not over the long term. For this reason, demand continues to grow for sustainability-linked financing facilities that can offer clients the opportunities to directly fund their ESG improvements; or to refinance existing general corporate funding to deliver a socio-economic impact in clients’ operational environment and surrounding communities.
“Standard Bank is proud to have acted as the sole sustainability structuring agent, arranger and investor or debt provider in respect of this debt package. The collaboration across product areas in providing a holistic solution to the client in support of their growth and ESG ambitions is core to Standard Bank and the Real Estate Finance team strategy,” concluded Joan Solms, Executive: Real Estate Finance at Standard Bank.