April 19, 2024 - SA REIT

Growthpoint Healthcare REIT has successfully completed the R106.4m acquisition of the Johannesburg Eye Hospital in Northcliff, which has transferred to become the ninth asset and the second specialist healthcare facility in its portfolio.

The premier specialist eye hospital in South Africa, and arguably on the African continent, the Johannesburg Eye Hospital has an esteemed 20-year history and is a valued member of its neighbourhood and community. The hospital specialises in eye surgery, laser eye procedures and includes the Medwedge Stepdown Facility.

Growthpoint Healthcare Property invests in licenced healthcare facilities which include acute, day and specialist hospitals, laboratories and biotechnology – such as pharmaceutical – manufacturing and warehousing facilities.

Launched in 2018 as SA’s first unlisted REIT focused exclusively on healthcare real estate, Growthpoint Healthcare REIT has R3.8bn of assets under management. After two-plus years of lost growth stemming from the impact that the COVID-19 pandemic had on the healthcare sector, it is asset-hungry with cash on hand to invest.

Dr Linda Sigaba, Fund Manager of Growthpoint Healthcare REIT, confirms that investment in specialist healthcare properties, such as the Johannesburg Eye Hospital, are attractive options in the current market.

“While there is an oversupply of private acute and multidisciplinary medical facilities in several areas, there is still a real need for specialist healthcare facilities,” says Sigaba.

These include sub-acute and stepdown facilities as well as those catering to mental wellness, oncology, urology and cardiology, among others.

“South Africa certainly needs more healthcare properties, and whether operated by the public or private sector, Growthpoint Healthcare REIT is positioned to support the healthcare sector in meeting the needs of South Africans,” notes Sigaba.

Growthpoint Healthcare REIT’s mandate is to acquire and develop healthcare properties, whether building new facilities, expanding or upgrading standing facilities, or acquiring existing properties to unlock operational and growth capital for their operators.

Its portfolio now includes a pharmaceutical warehousing and distribution facility, a medical chambers property and seven hospitals. These facilities are managed by some of South Africa’s finest medical providers, enjoy long leases and are considered long-standing landmarks in their communities.

Growthpoint Healthcare REIT distributes at least 90% of its distributable earnings to investors and targets gross ungeared total returns of between 13 and 16% a year. It remains focused on achieving a significant liquidity event for investors in future. Its current loan-to-value ratio is only 17%, and it already ticks all the boxes for an IPO and stock exchange listing.

Vukile Property Fund (JSE: VKE), the specialist retail real estate investment trust (REIT) has secured R1.1bn of funding through an innovative green loan and sustainability-linked loan with Absa. The loans, which are refinancing existing debt facilities, will be enabled as part of the refinancing process of existing debt and will be specifically directed to Vukile’s solar PV project and linked to its sustainability targets. The goals include reducing carbon emissions, boosting water savings and educating property professionals — initiatives that benefit the environment and society and align with Vukile’s wider environmental, social and governance (ESG) commitments.

Vukile’s approach to sustainability is ingrained into its culture with transparent measurement and reporting of sustainability targets to ensure alignment of its ESG strategy throughout the organisation. This supported the efficient and creative funding solution with Absa, which promotes greater alignment of Vukile’s financial strategy to positive environmental and social outcomes, where interest rates are directly linked to the achievement of preset targets.

Laurence Rapp, CEO of Vukile Property Fund, comments, “This sustainability-linked loan is a first for Vukile and represents a significant milestone in our ongoing commitment to sustainability.”
Through its expertise and commitment to sustainable finance, Absa played a crucial role as lender and sole sustainability coordinator, ensuring alignment with the Loan Market Associations’ Green Loan and Sustainability Linked Loan Principles.

Heidi Barends, Head of Sustainable Finance for Absa, says, “We partnered with Vukile to ensure market leading performance indicators are set for this funding solution, that are relevant to their sector and aligns to their business strategy. By combining environmental and social objectives, we’ve set a new standard for sustainable investment. Vukile is clearly committed to sustainability and we’re proud to have advised it on this strategic transaction. Our guidance throughout underscores our commitment to driving meaningful change in the financial landscape.
Maurice Shapiro, Group Head of Treasury of Vukile, remarks, “As our partners and a key stakeholder, Absa played an important role in delivering a fit-for-purpose innovative solution that helps align Vukile’s funding strategy with its ESG goals. Vukile is committed to making a difference for our communities, and we are pleased to partner with Absa.”

Vukile is committed to advancing its positive impacts through renewable resources, water-saving initiatives and education of property professionals, in line with its well-defined business strategy, based on the belief that thriving communities create successful shopping centres.

Rapp concludes, “Vukile aims to drive economic growth and be a change agent for social well-being and environmental stewardship, which ultimately assists our customers, our tenants and our business. We are committed to leading the way in sustainability and reporting openly about our practices.”

As a specialist retail REIT, Vukile was developed on the foundation of a well-defined, specialised growth strategy, with a focus on owning dominant retail assets across South Africa and Spain. Vukile’s assets are valued at around R40 billion, with 40% in South Africa and 60% in Spain. The Spanish assets are held in the 99.5% Vukile-owned Madrid-listed subsidiary, Castellana Properties Socimi. Vukile adopts a proactive approach to asset management and a strong focus on customer centricity as the driver of stakeholder value creation.

Image: Laurence Rapp, CEO of Vukile Property Fund