Archives for April 2022

Growthpoint Properties (JSE: GRT) announced its ‘funds management business’ will be formally named Growthpoint Investment Partners. The name reflects its strategy – one of Growthpoint’s four strategic thrusts – to co-invest and co-manage specialist alternative real estate investment portfolios where Growthpoint is both a capital partner and management partner.

Growthpoint began the groundwork for Growthpoint Investment Partners in 2014, when it identified internationalisation, local portfolio optimisation, trading and development, and co-investment as its core strategies. Before this, Growthpoint had favoured sole-ownership investments in SA almost exclusively, and in response it created a new platform to deliver its co-investment, co-management strategy. It is this platform, previously labelled the “funds management business”, that has been rebranded Growthpoint Investment Partners, and will continue to further diversify Growthpoint’s assets by harnessing new opportunities through co-investment in order to create sustainable value for Growthpoint’s stakeholders and investment partners.

Its new tactic as an investment partner – leveraging the management skills that have grown Growthpoint into a leading international property company – has proven a defensive growth strategy in the low-growth capital-constrained South African market, and led to a co-investment approach that has quickly gained traction.

From a zero-base in 2018, Growthpoint Investment Partners has already topped its target R15bn of assets under management by 2023. Now, it is aiming to double this in the next five years.

The growth of Growthpoint Investment Partners is adding meaningful depth to the real estate market by creating access to alternative opportunities in the unlisted and co-invested environment for the broader investment community, its investment partners as well as Growthpoint.

Norbert Sasse, Growthpoint Group CEO, says the renaming of this Growthpoint business is a significant milestone. “The time has come to create a formal identity for this robust partnership platform. Growthpoint Investment Partners has gained strong momentum and is successfully attracting co-investment capital. It delivers one of our core strategies, but has a distinctive investment model different from Growthpoint Properties’, and we wanted to reflect this in its new name.”

Growthpoint Investment Partners’ investment model starts with Growthpoint backing each investment with an anchor stake of around 20%. Co-investors then contribute up to 80% of the capital to the opportunity. Each investment has gearing of approximately 40%. The ability to scale each opportunity is a key consideration. So too is differentiating the assets from Growthpoint’s core SA portfolio in the office, retail and industrial property sectors.

Since 2018 it has launched three unlisted investments in specialist alternative real estate asset classes: African (ex. SA) income-producing commercial real estate, SA healthcare property, and SA student accommodation. Growthpoint is a cornerstone investor in these investments and plays a management role. Each has introduced new co-investment opportunities that leverage Growthpoint’s management and capital strengths. All have related positive long-term socio-economic impacts and enjoy access to Growthpoint’s excellent governance oversight frameworks, and extensive dedicated environmental, corporate social investment and sustainability resources.

Through Growthpoint, the Growthpoint Investment Partners platform affords its investments REIT status. However, the unlisted investments provide exposure to direct real estate that tends to be driven by long-term fundamentals rather than listed real estate volatility driven by short-term sentiment.

“The growth and scale of Growthpoint Investment Partners to date has established it as a leading investment partner in alternative real estate markets. Its new name not only reflects its significance for Growthpoint and its success in unlocking new real estate co-investment opportunities with its investment partners, but also its positive impacts and exciting prospects for considerable future growth,” says Sasse.

GROWTHPOINT INVESTMENT PARTNERS’ ALTERNATIVE REAL ESTATE INVESTMENTS:

• Growthpoint Healthcare REIT launched in 2018 as SA’s first unlisted REIT focused exclusively on healthcare property investment. Its assets have grown to R3.4bn. It has raised over R1.3bn of co-investor funding, with investment partners including the IFC, Kagiso Capital, Sentinel Pension Fund, and Vulindlela Holdings. The calibre of its investors is an endorsement of its robust ESG credentials. Growthpoint has a 55.9% share in Growthpoint Healthcare REIT, which invests exclusively in healthcare property assets in SA with a mandate to acquire and develop acute, day and specialist hospitals, as well as laboratories and biotechnology manufacturing and warehousing facilities. It has a R5bn pipeline of acquisitions and developments. The aim is to scale Growthpoint Healthcare REIT to some R10bn in assets for a stock exchange listing.
• Growthpoint Student Accommodation REIT launched in December 2021 to become SA’s first unlisted purpose-built student accommodation REIT. It has a R2bn portfolio of seven assets with 4,979 beds, which has a two-year rental underpin to mitigate against short-term impacts of Covid-19 and an immediate three-development growth pipeline. Its first close attracted partner capital commitments of R1.1bn, and around R1.4bn in equity including Growthpoint’s co-investment of R240m representing 16% cornerstone investment and co-investor Feenstra Group’s 11%. It has attracted significant commitments from preeminent investment holding companies. By investing in and developing new accommodation specifically for university students, Growthpoint Student Accommodation REIT helps to improve education outcomes and create economic opportunities, making it an impact investment. It will grow towards R12bn in assets and a stock exchange listing within seven years.

Lango Real Estate (formerly Growthpoint Investec African Properties) commenced in 2018. Lango’s assets have since grown to USD601m. It has raised over USD320m in partner funding from notable South African and international institutional investors and has emerged as a leader in the African real estate market. Growthpoint has a 16% shareholding in Lango, with a co-investment of USD50m. Lango which invests in prime commercial real estate assets in key gateway cities across the African continent. It has 11 income-generating commercial properties in Ghana, Nigeria, Zambia and land holdings in Anglo. It strives to act as a catalyst for impact across the continent. Lango is currently in a capital raising period, which it intends to use mainly to acquire a pipeline of assets, particularly in Nairobi, Kenya. It is positioned for a stock exchange listing in the medium term.

• Emira is the first SA REIT to receive an EPC – for Knightsbridge Block A office building
• The GBCSA has confirmed Net-Zero accreditation for Knightsbridge Block A
• The building’s new 580 PV panel solar farm was commissioned last month (February 2022)

Emira Property Fund has become the first JSE-listed property company in South Africa to receive a government-mandated Energy Performance Certification for one of its buildings – Knightsbridge, Block A, in the heart of Bryanston. Knightsbridge is the first of 54 certificates Emira plans to obtain for the mandated commercial buildings in the Emira portfolio.

From 7 December this year, all publicly- and privately-owned offices, schools, universities, places of public assembly and indoor sport and theatres above a specific size must have and display Energy Performance Certificates (EPCs). Emira partnered with experts in the field, RMS (Remote Metering Solutions), to meet the new regulatory obligations and progress its environmental sustainability goals.

“Emira has acted early to certify its buildings. Ensuring compliance with this new regulation is in line with our good governance. We are voluntarily certifying non-mandated buildings in addition to those that require certification, which is consistent with our commitment to best practices, carbon reduction and the environment,” says Ulana van Biljon, COO of Emira Property Fund.

It is fitting that Emira chose Knightsbridge Block A to debut SA’s first EPC as it was, just this month (March 2022), certified by the Green Building Council South Africa (GBCSA) as one of the first Net-Zero Energy buildings in SA. It has received a Net Zero – Carbon Level 2: Occupant Emissions (modelled) certification, demonstrating its annual net-zero energy consumption.

A prime multitenant office property and Emira’s head office location, Knightsbridge brings to life Emira’s commitment to environmentally friendly practices, which is evident throughout its portfolio. It is a showcase of resource efficiency, biodiversity and positive ecological impact.

Its new multi-level solar farm plays a pivotal role in its energy-neutral operations. The Knightsbridge renewable solar energy project – Emira’s tenth so far – commenced in October 2021 starting with two months of design planning to support both a net-zero rating and cost-benefit feasibility. Work got underway in December 2021 and the system was commissioned at the end of February 2022.

This particular building, a relatively new development, was always designed to incorporate a PV farm and achieve net-zero status. Its consumption patterns show it is ideal for a PV installation, and it can accommodate a combination of roof-top and ground-mount structures so the solar farm can achieve the desired energy yield. In fact, its total energy yield is higher than the building’s on-record consumption, taking into account the capacity limits and other impacts of Covid-19.

Emira’s Knightsbridge PV project at a glance:

• 580 PV panels
• 132 roof-top panels
• 448 ground-mount panels
• First-year guaranteed energy yield of 369.9 MWh
• Equivalent to removing around 40 medium-sized homes from the power grid.

For Knightsbridge’s tenants, this means operating in a much greener environment and those tenants who report on any sustainability indices are able to confirm that their building has achieved independently verified net-zero energy status ahead of the targets set in the Paris Agreement. It makes Knightsbridge an attractive address for large corporates, almost all of which now consider greening initiatives when selecting their office space.

Van Biljon reports that the offices at Knightsbridge are currently fully let. “Our energy and other environmental initiatives, from biodiversity to water saving, support the letting of future phases of Knightsbridge and prolong its ongoing attractiveness and performance for tenants.”

Importantly, Emira’s solar farms position it to take advantage of future power regulations, including    feeding power back into the grid.

In the six months July 2021 to December 2021, Emira’s nine PV farms saved 4.8 million kWh and removed 4 639tCO2e emissions annually. Now, with the Knightsbridge installation and the further expansion of its Pretoria Wonderpark Shopping Centre system of 1.6MWp (DC) to 2.8 MWp (DC), its positive environmental impacts will be even more significant.

Geoff Jennett, CEO of Emira, says, “Emira’s purpose of being great in providing great real estate includes minimising our impact on the natural environment. We do this by managing our carbon footprint, improving affordable and clean energy, implementing integrated waste and recycling plans, water management and water harvesting projects and safeguarding biodiversity wherever we invest.”

Emira was one of only 80 global companies, and the only one in Africa, selected to work with SBTi to develop the Global Net-Zero Standard to align the Paris 1.5 degrees Celsius Carbon Reduction Target.

“Environmental, social and governance (ESG) considerations are at the heart of our businesses and entrenched in our leadership and performance. As a responsible landlord, we have various targets and initiatives to enact Emira’s ESG commitments, which we will continue to expand,” says Jennett.