Green Bonds raise money that is specially allocated for funding projects that result in positive environmental and climate benefits, IMIESA reports. The R1.1 billion Green Bonds, which are available for terms of five, seven and ten years, issued by Growthpoint Properties will be used to fund the green buildings and green initiatives of South Africa’s leading REIT.

The Green Bonds are priced at 139 basis points (1.39%) for the five-year term, at 169 basis points (1.69%) for the seven-year term and at 200 basis points (2.00%) for the 10-year term above three-month JIBAR. The bond auction took place on Tuesday, 6 March 2018, and is believed to be the first public auction in South Africa for a 10-year bond for a real estate company.

“The JSE is proud to welcome Growthpoint Properties to the Green Bond Segment as the first corporate in South Africa to issue a Green Bond. Growthpoint’s successful inaugural Green Bond proves there are benefits in committing to promoting South Africa’s climate-resilient future as well as for being at the forefront of the financial sector’s response to the investment challenges posed by climate change,” says Donna Nemer, Director Capital Markets at the JSE.

Commenting on the listing Norbert Sasse, Group CEO of Growthpoint Properties, says Growthpoint’s inaugural Green Bonds link the company’s sustainable developments and green buildings with capital markets.

“This gives investors a unique opportunity to participate in supporting greater environmental sustainability and climate change mitigation and enables them to evaluate the environmental impact of their investment. The work of the JSE, bond arranger RMB and our team at Growthpoint, as well as the interest and support of investors in our pioneering Green Bonds, has been exciting. We are pleased with the results of the issue and the positive response from local and international investors. We intend to continue to be a catalyst for a more sustainable property sector,” he concludes.

According to Business Tech, the Growthpoint Green Bonds constitute green instruments falling within the Green Bond Principles of the Real Estate Sector and the green segment of the JSE’s Interest Rate Market.

Among the investors in the new Growthpoint Green Bonds is the African Local Currency Bond Fund (ALCB Fund), an initiative of KfW Development Bank and the German Government backed by additional investors. It aims to promote the development of African capital markets by acting as an anchor investor in primary bond issuance. It has invested around $70 million since inception in 13 countries. In addition to anchor investments, the ALCB Fund offers technical assistance to cover transaction related costs, including compliance with international Green Bond standards.

The proceeds of the bonds will be used exclusively to finance or refinance Growthpoint’s new and existing sustainable green properties and its projects which reduce environmental impact.

It will be mainly used to refinance funding for the green office buildings in the new Growthpoint THRIVE Portfolio and specifically the THRIVE Platinum Portfolio, which includes its top green-rated office properties. Buildings in this portfolio have a South African Property Owners Association (SAPOA) Premium- or A-grade rating. They also have a Green Building Council of South Africa (GBCSA) Green Star SA rating of Four Stars or higher (design, as-built or existing building performance).

In addition, suitable industrial and retail properties with Four-Star Green Star ratings or higher will also be eligible. Environmental projects related to Growthpoint’s buildings that have positive environmental impacts, such as solar energy projects, will also qualify for Green Bond funds.

Among the investors in the new Growthpoint Green Bonds is the African Local Currency Bond Fund (ALCB Fund), an initiative of KfW Development Bank and the German government backed by additional investors. It aims to promote the development of African capital markets by acting as an anchor investor in primary bond issuance. It has invested around $70-million since inception in 13 countries. In addition to anchor investments, the ALCB Fund offers technical assistance to cover transaction-related costs, including compliance with international Green Bond standards.

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