Archives for January 2024

Growthpoint signs landmark wind-hydro-solar PPA deal with Etana Energy, with hydroelectricity from Serengeti Energy

Growthpoint Properties (JSE: GRT) has entered into a milestone Power Purchase Agreement (PPA) with Etana Energy for 195GWh* of renewable energy a year, representing 32% of its total current annual electricity consumption (612GWhs in FY23).

In November 2023, South Africa’s leading REIT, Growthpoint, signed a PPA with licenced electricity trader Etana Energy to wheel** electricity to its commercial property buildings in several jurisdictions across the country.

The deal has set in motion the country’s first multi-jurisdiction, multi-building, multi-source renewable energy wheeling arrangement, and will enable Growthpoint’s tenants to access green energy and reduce their carbon footprint.

Through this agreement, Etana will cover 70% of the power consumed by Growthpoint’s participating buildings, and in some buildings, Growthpoint will even be able to provide its tenants with the ability to purchase 100% renewable energy and actively drive carbon reduction.

“The wheeled renewable energy will mainly consist of wind, with a smaller component of hydro and large-scale solar electricity. The combination of generation sources allows for a high coverage of Growthpoint’s energy use, as electricity is generated throughout the day and night.

Estienne de Klerk, SA CEO of Growthpoint Properties, says, “This initiative significantly advances Growthpoint’s progress towards our climate commitment of being carbon neutral by 2050. We are extremely pleased to collaborate with energy innovators like Etana and Serengeti to support our tenants to reach their own environmental goals by giving them access to renewable energy.”

As a result of the agreement with Etana Energy, Growthpoint has exclusive rights to purchase all of the roughly 30GWh that will be generated annually by a 5MW hydroelectric power plant developed, owned and operated by Serengeti Energy. The project is situated on the Ash River within the Lesotho Highlands Water Scheme (LHWS), close to Clarens in the Free State, which provides the added benefit of effectively generating 24/7 baseload power***. Growthpoint has also shown some interest in investing in the power plant by signing a Memorandum of Understanding with Serengeti Energy. Serengeti Energy owns and manages renewable energy projects of up to 50MW (mainly hydro) in sub-Saharan Africa and currently operates nine plants in five countries.

Initially targeted for South Africa’s Renewable Independent Power Producer Programme (REIPPPP), which contributes private sector-produced electricity to the national grid, Serengeti’s focus for this hydro plant shifted, and it advanced the project for the commercial and industrial sectors.

Strafford Harris, Managing Director SA, Serengeti Energy, comments, Hydro as a technology most definitely has a role to play in the energy mix in South Africa. It is encouraging for our sector to have concluded a PPA with Etana and Growthpoint, supporting appreciation for this technology not only for industrial use but also in the commercial sector.”

The project is being constructed on the water transfer scheme between Lesotho and South Africa, within the LHWS and positioned to produce reliable baseload power. It is also well placed to capitalise on the LHWS Phase 2 future expansion. The hydroelectric power plant has reached financial close and is currently under construction. The commercial operations date is expected to be 1 July 2025, when it will supply its first electricity to Growthpoint, wheeled via the Eskom grid and traded through Etana.

Thereafter, the commissioning of wind and additional solar production from Etana’s portfolio of renewable energy projects connected to the national electricity grid will commence.

Reyburn Hendricks, Director of Etana Energy, comments, “We’re tremendously excited to be partnering with Growthpoint and Serengeti to help address SA’s electricity crisis and reduce the carbon intensity of our energy system. Business has a clear role to play in solving our biggest challenges, and this is a highly replicable, scalable example of how to achieve this while creating value for all involved.”

Etana provides cost-competitive clean energy access from new large-scale renewable energy projects connecting to the SA grid. It has partnered with IPPs on multiple ready-to-build wind, hydro and solar projects with secured grid connections, which will come online over the course of 2025 and 2026. The company’s strategic focus on wind (and, in this case, hydro) projects enables greater renewable energy supply coverage compared to solar options alone, optimising cost savings and environmental benefits.

Emira concludes the acquisition of Transcend

Emira Property Fund (JSE: EMI) has finalised a scheme of arrangement resulting in Transcend Residential Property Fund becoming wholly owned by Emira.

In 2018, Emira took its first 34.9% stake in the then JSE-listed REIT Transcend, thereby diversifying its investments to include the value suburban multifamily residential rental property segment.

Geoff Jennett, CEO of Emira Property Fund, comments, “Our journey with Transcend is a success story for Emira. We partnered with the right asset management team to advance our diversification and earn good returns.”

Since the initial investment, shifts in the market saw the appetite for small-cap stocks dry up and, being very illiquid, there was no longer value in Transcend remaining listed. Emira responded by increasing its ownership in Transcend with a view to bringing it in-house. Emira grew its holding in Transcend to 68%, eventually reaching 100% late last year. Subsequently, Transcend has been delisted from the JSE.

Jennett adds, “We are pleased to have successfully converted a good indirect equity investment into a wholly owned subsidiary, adding another powerful lever to Emira’s overall diversified strategy. Residential property now represents about 16% of our South African portfolio, although this is likely to change in line with market opportunities.”

This transaction continues Emira’s track record of advancing its strategies incrementally, starting by taking an initial position in opportune investments to establish a springboard from which to assess, create and grow value for shareholders over time.

Emira’s investment approach has played out advantageously in its take-up and subsequent sale of a stake in Growthpoint Properties Australia and its co-founding and accretive sale of its stake in specialist retail fund Enyuka. This tactic is also driving Emira’s incremental investment into the US where its asset-by-asset capital allocation approach with in-country specialist co-investment partner, The Rainier Companies, has secured a meaningful 19% of Emira’s asset base offshore in equity investments of R2.8bn (USD151.9m) comprising 12 grocery-anchored open-air convenience shopping centres.

Jennett notes, “At Emira, we actively manage our capital allocation, and constantly assess assets for their optimal use and act accordingly. There is nothing passive about our approach to our assets even though it does take time.”

Emira has a diversified portfolio that is balanced with a mix of assets across sectors and geographies. In South Africa, Emira’s 91-property strong portfolio includes commercial (retail, office and industrial) and residential assets valued at R12.1bn.

Ensuring consistency for the Transcend portfolio’s 4,000 tenants, the properties will continue to be managed by highly-regarded International Housing Solutions (IHS) while also benefitting from greater alignment with Emira’s systems and a bigger bank of industry knowledge, which includes a wealth of experience across property sectors as well as solar PV plants, biodiversity and community projects.

Emira plants for the years ahead

Eco-friendly, green and relaxing – trees and plants benefit everyone. They bring more biodiversity to big cities, reduce CO2 emissions, feed people and attract pollinators that are vital for food security and environmental sustainability.

Emira Property Fund (JSE: EMI), the diversified, balanced REIT with a track record of delivering stability and sustainability through different cycles, keeps improving its surroundings for the good of its stakeholders, including serving communities. To make a greater positive impact on the environment, Emira strategically partners with the World Wide Fund for Nature (WWF) and Trees for Africa.

By creating a sustainable environment of indigenous plant life, Emira provides a better overall experience for tenants and visitors at its properties, while also enhancing nearby communities. The company plants fruit and shade trees, as well as spekboom (Portulacaria Afra), at its properties, blending real estate with nature and demonstrating ecological responsibility.

As an indigenous succulent, spekboom is a hardy xeriscaping plant that is drought-tolerant, 670 spekbooms have been planted at 26 of Emira’s properties across South Africa, bringing nature closer to people, making cities greener and the air cleaner, and enhancing biodiversity. Significantly, spekboom contributes to cleaner air by directly catching pollution with leaves. This resilient plant has an exceptional capacity to offset carbon emissions and helps fight climate change and air pollution by acting like a carbon sponge and removing carbon dioxide from the atmosphere.

Continuing its annual tradition, Emira has again partnered with Food & Trees for Africa to offset its operational carbon emissions for company travel, staff commute and paper consumption. In 2023, Emira donated 150 fruit trees and indigenous shade trees of different varieties through the Trees for All programme. The trees were planted at Watercrest Primary School, Cedar High School and Sivile Primary School, all in the Western Cape. During their 40-year growth period, these 150 trees will offset 55,35 tonnes of CO2 and provide a healthier environment.

Ulana van Biljon, Chief Operating Officer of Emira, says, “Emira is dedicated to sustainable business. We focus on environmental protection and addressing our clients’ needs, many of whom expect their business partners to consistently act responsibly in response to present-day challenges, such as renewable energy, water security, clean air and urban biodiversity conservation. Our local efforts, such as planting trees in communities and growing spekboom around our properties, demonstrate that we believe that even the smallest initiative is meaningful. We promote this attitude to encourage others to care for our shared home, Planet Earth.”

Planting is one of the various ways that Emira makes a positive contribution to biodiversity. Since 2020, it has installed 16 beehives at eight of its properties in Gauteng and KwaZulu-Natal to address the decline of global bee populations, which contribute so much to society, as well as the biodiversity at its properties.

Additionally, Emira undertakes recycling for its tenants and shoppers, uses solar energy from rooftop installations, harvests rainwater, applies various energy- and water-saving initiatives, plants community gardens and composts plant matter.

“As biodiversity is a crucial part of healthy ecosystems, protecting it is inextricably linked to the well-being of people and communities. Whether or not people appreciate it, healthy ecosystems need to co-exist with the world of business, the natural world provides economic support and forms the country’s ecological infrastructure, offering clean air, water, arable land and food for its people,” says van Biljon.