Emira Property Fund (JSE: EMI) has raised R805m of innovative sustainability-linked debt with reduced margins for achieving pre-set environmental sustainability targets.
In only the third issue of its kind in South Africa, Emira listed a new unsecured three-year R380m sustainability-linked bond as part of its DMTN programme. The REIT worked with investors to incorporate sustainability targets into the terms of the note. On that basis, the issue received more demand than could be executed. The oversubscribed issue, arranged by RMB, attracted five investors, and added a new investor to the programme.
“Sustainability is becoming a key focus to investors and Emira’s commitment to measurement targets supported the positive result the offer received from the debt capital markets. Investors are further willing to incentivise progress to improving sustainability by an ultimate reduced cost of funding” says RMB DCM Distribution, Delia Patterson
Emira has also secured a R225m four-year facility from Standard Bank and a R200m four-year facility from RMB. In seeking to partner with companies that prioritise the natural environment, the banks proposed refinancing Emira’s maturing debt on a basis that incentivises increased environmental sustainability. The agreements set out sustainability targets and timeframes which when achieved by Emira will reward it with a lower cost of funding.
Greg Booyens, Chief Financial Officer of Emira, comments, “We are excited to work with like-minded funders to drive positive environmental impacts. Sustainability-linked funding is a good fit for Emira, and we are well positioned for the growing focus on ESG-led finance and investment. We have a strong environmental ethos and an established track record of positive impact. This new form of funding ties our environmental performance to our financial performance, and further integrates sustainability targets in every area of our company. It is good for business and good for the environment.”
Emira’s environmental commitment and leadership are reflected in more than decade of CDP (formerly Carbon Disclosure Project) reporting. Emira is the first company in Africa to have its science-based carbon reduction targets approved by SBTi. It invests into clean energy from renewable resources, and already produces solar power of 11-million kWh per annum. Water saving initiatives at Emira’s properties include rain and ground water harvesting. It actively diverts waste from landfill, conserves biodiversity and participates in green building certification. Emira will advance its positive impacts in many of these areas aligned with the pre-agreed funding targets.
Justin Bowen, National Development Manager and Head of Sustainability for Emira, says, “Our comprehensive environmental sustainability strategy and transparent disclosure support Emira’s purpose of being a provider of great real estate. Properties that are energy- and water-efficient, and use more renewable resources, ultimately assist our tenants and our business to contain utility costs and lighten our environmental footprints. We are thrilled to include our funders, as leading actors in sustainable finance, as key role-players in our value chain of positive environmental impacts.”
Emira is driven to provide great real estate, and its portfolio is structured for adaptability to deliver stability and sustainability through different economic and property cycles. Emira invests in a quality, balanced portfolio of retail, office, industrial and residential assets. It is diversified across property sectors and internationally in the US through a combination of directly-held assets and co-investments with partners who are experts in their respective fields.
