Archives for December 2022

IFC invests in Growthpoint Properties’ green bond

To promote more sustainable and resource-efficient buildings in South Africa, IFC today announced an investment in a green bond issued by Growthpoint Properties Limited that will help the company finance energy and water efficiency improvements in its existing commercial properties.

IFC will invest 1 billion South African rand (about $54 million) in the green bond, which will fund green improvements across Growthpoint’s office, industrial and retail spaces across South Africa. The retrofitting improvements are expected to reduce CO2 emissions from the company’s portfolio by more than 18,000 tons annually.

The bond will also help Growthpoint, South Africa’s largest primary Johannesburg Stock Exchange (JSE) listed real estate investment trust (REIT), refinance its green office building located at 144 Oxford in Rosebank, Johannesburg. The building has a Green Star 5 category certification, as defined by the Green Building Council of South Africa (GBCSA).

“Growthpoint is committed to creating space to thrive with innovative and sustainable property solutions in environmentally friendly buildings while improving the social and material wellbeing of individuals and communities. This green bond supports our ESG strategy and renewable energy goals and furthers the diversification of our funding,” said Gerald Völkel, Growthpoint Group Financial Director.

“IFC is committed to accelerating access to green and sustainable buildings in South Africa to address climate change, protect the environment and support economic activity,” said Adamou Labara, IFC Country Manager for South Africa. “The green bond investment will contribute to greater climate change resilience in the country by supporting climate-smart infrastructure and reduce the private sector’s carbon footprint.”

Absa Corporate and Investment Banking (CIB) acted as bond advisors for the transaction and helped Growthpoint with the private placement of the bond on the JSE.

“This deal demonstrates Absa CIB’s commitment to supporting our clients on their ESG journey and our ability to deliver tailored solutions by linking clients’ sustainable growth strategies with their financing,” said Heidi Barends, Head of Sustainable Finance at Absa CIB.

Increased funding for green buildings is vital in South Africa, which is facing increasing power and water supply shortages. Furthermore, access to green funding remains limited in the country.

The bond aligns with Growthpoint’s ambitious sustainability strategy to certify its entire portfolio of buildings as carbon neutral by 2050. The strategy includes reducing its greenhouse gas emissions by 25 percent and increasing its renewable energy use by more than five times by 2026.

The green bond ZAR1 billion issuance was issued under Growthpoint’s existing Domestic Medium-Term Note (DMTN) programme, which is registered at the Johannesburg Stock Exchange. It aligns with IFC’s strategy to green the commercial sector in South Africa by further developing capital markets, promoting climate-smart investments, and crowding in climate-relevant private capital.

The post IFC invests in Growthpoint Properties’ green bond appeared first on Growthpoint Properties.

Emira’s s embedding ESG values in the foundations of property ownership

Emira Property Fund (JSE: EMI) is making practical moves to further integrate environmental, social and governance action into its investment and operating decisions.

South Africa and its property sector face a wave of sustainability legislation, especially regulations to operate more efficiently to reduce energy, water and waste consumption. However, Emira is on the front foot, having already made significant progress in these and other key environmental, social and governance (ESG) areas over many years.

Practising sustainability in real estate was once chiefly cost-driven. “While this is certainly a great benefit, and we strive to keep our bottom line contained and our tenants’ total cost of occupancy down, Emira has a more genuine purpose of making a difference,” says Geoff Jennett, CEO of Emira.

He goes on to explain, “When sustainability initiatives are genuinely driven by the highest ESG standards, they also become an effective way to lower our cost of capital, reduce energy costs, decrease asset obsolescence, increase brand awareness and leasing attractiveness, have a positive impact on asset values and contribute to a thriving economy.”

Ulana van Biljon, COO of Emira, adds, “Given the intense operating side of our industry, we find that practical solutions that are part of everyday processes are the most effective way to get everyone on board with our sustainability efforts. Our employees share our purpose of being great in the provision of great real estate, which includes owning and operating buildings that support sustainability for communities and the built environment.”

She says, “Working together with purpose and in an ethical manner also supports employee retention and a great culture. At Emira, we also appreciate the benefits of working together with our stakeholders and industry peers to share the responsibility of contributing to a more sustainable future.”

Emira is constantly seeking ways, through its everyday business activities, to ensure that its existing sustainability initiatives are kicked into an even higher gear and introduce new ones where it can achieve meaningful impact.

Among its high-profile projects is renewable energy, which Emira began in 2015 with its first solar photovoltaic (PV) farm installation. It has since increased its installed capacity of solar photovoltaic (PV) systems and now has solar panels at nine properties, which equates to nearly 24,000 panels and over 9,000 kilowatt peak capacity. Emira owns one of the first Net-Zero Carbon buildings in South Africa. It also led the real estate sector by completing the certification of 31 of its buildings for energy performance this year.

As part of its water use and management, Emira aims to ensure that the water supply at its properties
is reliable and sustainable, considering South Africa is a water-scarce country. Its good water stewardship is expressed in various ways, including water efficiency, rainwater harvesting and storage.

Emira’s waste management plan is directed at the diversion of waste from landfill and the responsible, compliant disposal of all materials. Emira has introduced hazardous waste disposal boxes for fluorescent lighting tubes at all its properties. It also practices recycling at most of its shopping centres and intends to expand this to its industrial buildings. It also uses waste contractors that are committed to waste diversion from landfill and measure the results of these efforts.

While Emira tackles the projects for which there are relatively straightforward solutions, it doesn’t shy away from more complex challenges. It is involved in various social initiatives and lends a hand to worthy causes in communities around its properties, with projects ranging from community gardens to graduate mentoring.

“We understand that for our business to grow, our economy must grow, and so we do our part in advancing economic inclusion and promoting a flourishing economy,” says Jennett.

Meaningful transformation in South Africa benefits from the difference Emira makes as a business, and it is proud to have achieved a B-BBEE Level 2 Contributor status.

For the past nine years, Emira’s graduate programme has enhanced its business and attracted and nurtured talent for the industry and the country. Emira ensures that around 8% of its employees at any time are young graduates whose careers it can launch by providing experience at one of South Africa’s foremost JSE-listed REITs.

The one-year programme is exclusive to black, Indian and coloured graduates who have completed a four-year Bachelor of Science Property Studies university degree. Graduates are exposed to the many aspects of property ownership and management and gain experience and mentorship from across all areas of Emira’s business. Graduates who have come through Emira’s mentorship programme have gone on to hold key industry positions.

“We believe that acting on our environmental commitment and pursuing a purposeful programme of meaningful social investment is crucial as a differentiator for Emira,” says Jennett.

The post Emira is embedding ESG values in the foundations of property ownership appeared first on Emira Property Fund.

Hyprop reports improved trading across SA, EE retail portfolios

Monday, 5 December 2022. All of Hyprop’s dominant retail centres in South Africa (SA) and Eastern Europe (EE) have continued to enjoy more buoyant trading conditions over the last few months. These favourable trading conditions, together with the group’s strong balance sheet, should help it to tackle challenges such as rising inflation, higher interest rates, increased energy costs and socio-political changes, says CEO Morné Wilken.

“Risk in the current economic environment remains elevated and fluid, requiring caution and conservatism in our approach and strategy,” Wilken says. “We continue to focus on generating sustainable total returns for shareholders, reducing debt, and allocating capital prudently to diversify risk and optimise returns.”

In a pre-close operational update, Hyprop reported that it held R2.4 billion of unutilised revolving credit facilities and R814 million in cash at 31 October 2022. The loan-to-value (LTV) ratio was 38.2%, after paying the dividend for the 2022 financial year and implementing a dividend reinvestment plan (DRIP), which raised R500 million in new equity and was supported by 84.4% of shareholders.

Hyprop has continued ensuring its portfolios remain relevant in line with its repositioning strategies whilst driving initiatives related to recycling materials, reducing waste, managing assets to be more energy- and water-efficient, and reducing carbon emissions in line with its environmental strategy. Specific initiatives include installing solar PV at all Gauteng centres as well as Propelair toilets (which are more water-efficient) at three sites, to be rolled out in most local centres over time and employing various organic waste management technologies.

South African portfolio 

Foot count through the South African centres continued recent positive trends, with a 7.1% increase in the four months to end-October 2022 over the same period in 2021. Foot count on Black Friday was 8% higher than in 2021, and tenant turnover for the four-month period grew by 16.9%. Demand for retail space remains robust and many retailers are trading better than they were before the pandemic. Retail vacancies remained low at 1.3%.

Some of the new store openings across the portfolio include Scape Goat Gallery, George’s Grill House and Versailles Luxury at Hyde Park Corner; Huawei, Cosmic Comics and Freedom of Movement at Clearwater Mall; and at Canal Walk, South Africa’s first Nike Live store as well as the Western Cape’s first Xaomi and SPCC stores.

The centres are well-positioned for the approaching festive season.

Eastern European portfolio

Tenant turnover, trading density and foot count have improved significantly since the lifting of Covid-19 restrictions in Eastern Europe earlier this year. Vacancies remain low at 0.5%, confirming the dominance of the centres.

The centres performed very well over the Black Friday weekend, with foot count up 19.6% on the Friday and 23.1% on the Saturday compared with the previous year.

Highlights include various store renovations by tenants. Six new stores have opened at The Mall in Sofia and the planned revamp of H&M in 2023 will incorporate Bulgaria’s first H&M Home. At Skopje City Mall, the first Kiko Milano in North Macedonia has been launched. City Center one East’s tenant mix was improved Ghetaldus Optika was relocated to the upper level to create an optometrist cluster on this floor.

Increased costs of electricity, fuel and gas are driving inflation in EE, which impacts tenant occupancy costs.

“We are closely monitoring tenant performance on a monthly basis and have granted temporary rent relief to some tenants in exchange for future rental escalations and longer lease tenure,” Wilken says.

Sub-Saharan Africa (ex-SA) portfolio

At Ikeja City Mall in Nigeria, trading at the new Nike store has exceeded expectations since its opening in August 2022. The centre is performing well, with one vacancy of 166m². Hyprop is working with Actis to implement the sale of Ikeja and considering various options, including a partial sale of our investment.

In Ghana, turnover and trading density have been hit by the 144% depreciation of the Ghanaian cedi against the US dollar since January 2022. However, vacancies have reduced to 12.7% in October from 13.4% in June as a result of focused asset management. Accra Mall, West Hills Mall and Kumasi City Mall are all celebrating new store openings. An exit agreement was concluded with Game in Ghana and there is good progress in re-letting their space.

Release of interim results

Hyprop’s interim results for the six months ended 31 December 2022 are scheduled to be released in March 2023.