Exemplar REITail and Absa partner on first syndicated sustainability-linked use of benefit loan

Jason McCormick, CEO of Exemplar REITail Limited.

In a landmark transaction that highlights confidence in township and rural commercial property, Absa Bank acted as sole Global Coordinator and Bookrunner in a strategic refinancing of Exemplar REITail Limited’s R3.135 billion debt package.

The transaction includes a R1.791 billion sustainability-linked loan, with margin reductions applied, subject to the borrower’s successfully achieving pre-agreed environmental targets i.e., solar energy, carbon offset and water intensity. Uniquely, the facility includes use-of-benefit provisions, for which the borrower has undertaken to utilise any interest cost savings arising from the sustainability-linked loans to invest in community initiatives in their property catchment areas.

Exemplar REITail is a leading developer, owner, and manager of township and rural shopping centres in South Africa. The Mall of Thembisa, developed by McCormick Property Development and one of its recent acquisitions, was recently named the ‘Best Retail Development’ and awarded a 5-star nomination at the International Property Awards.

The R3.135 billion senior, secured, syndicated debt package establishes a flexible platform to support Exemplar REITail’s growth. Beyond refinancing existing debt, the facilities will be used for capital expenditure as well as increasing available working capital for the business.

The transaction was well supported by the market, garnering appetite that exceeded triple the original transaction size. As a result of the strong demand, the transaction was upsized to re-finance the majority of Exemplar REITail’s debt. In addition to its role as Global Coordinator and Bookrunner for the transaction, Absa Commercial Property Finance provided over 50% of the funding requirement and it is acting as a facility agent.

We are delighted with the successful conclusion of this landmark transaction highlighting the confidence of the market in the strength of the Exemplar business. The proceeds of this transaction have, in part, been earmarked for the continued expansion of the business, helping us to provide retail services to more of the most under-serviced regions of our nation. We have always put our local communities first which is once again emphasized by this transaction. All interest savings generated will be invested directly into our communities, ensuring their ongoing upliftment and development in-line with our #ChangeforGood mantra”, commented Jason McCormick, Exemplar REITail Limited CEO.

Klaus-Dieter Kaempfer, Head: Commercial Property Finance and Equity Investments, Absa said: “This landmark transaction is a great example of how Absa CIB is working in partnership with clients, acting as both lead arranger and funder. Despite the challenging market backdrop in the commercial property sector, the fund raising was a huge success, and a testament to the quality of Exemplar’s business and management, as well as our expertise in managing capital markets transactions of this nature.”

We are also particularly proud of our leading role in developing an innovative new Sustainable Finance solution, whereby the benefit received by the Borrower for meeting environmental KPI’s is reinvested into CSI initiatives, allowing lenders and the borrower to play a role in addressing the challenges in the societies within which we operate.”