Growthpoint Properties is the first South African company to issue a Green Bond on the Johannesburg Stock Exchange (JSE). The Growthpoint Green Bonds, for terms of five, seven and ten years, were issued and listed on the JSE on Friday, 9 March 2018.
Green Bonds raise money that is specially allocated for funding projects that result in positive environmental and climate benefits. The R1.1 billion (USD94 million) Green Bonds issued by Growthpoint will be used to fund the green buildings and green initiatives of South Africa’s leading REIT.
The Green Bonds form part of Growthpoint’s R20 billion Domestic Medium Term Note (DMTN) Programme. Growthpoint has a national scale Aaa.za Moody’s rating, with many banks opting to hold Growthpoint paper as High-Quality Liquid Assets (HQLA).
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 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.
Donna Nemer, Director Capital Markets at the JSE, says: “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. Growthpoint is laying new foundations for the capital flows needed to achieve the commitments within the South African context for securing investments and jobs in future and is to be greatly congratulated for this.”
Norbert Sasse, Group CEO of Growthpoint Properties, comments: “Growthpoint’s inaugural Green Bonds link our 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.”
Dirkje Bouma, Growthpoint’s Group Treasurer, adds: “The new Green Bonds give Growthpoint access to alternative sources of funding and allow us to lengthen the weighted average term of our debt book.”
RMB was the lead arranger of the bonds and Delia Patterson, Senior Transactor – Debt Capital Markets Distribution at RMB, explains: “Growthpoint is the first corporate issuer to offer Green Bonds to the debt capital markets and this was very well received with strong interest from a wide group of local investors and specific international funds. Investors appreciate the additional level of oversight that is provided to meet the Green classification criteria and this usually results in stronger appetite at better pricing than the nominal bonds. Through this issuance Growthpoint has successfully positioned themselves as a world-class property fund clearly committed to supporting and investing in environmental sustainability, with their Green Bond Framework and reporting commitment attached to the bonds issued, and with the longest 10-year bond maturing in 2028.”
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 USD70 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.
Karl von Klitzing, Chairman of the Board of the ALCB Fund, says: “We are delighted to be investing in Growthpoint’s inaugural Green Bond and to be supporting the sustainable real estate sector. As the first corporate Green Bond issuance in Sub-Saharan Africa, it represents a milestone for the market. Growthpoint has developed a comprehensive framework with the Green Building Council of South Africa to ensure investors are well informed of the environmental impact of its green buildings. We hope to contribute towards improved reporting standards as a catalyst for further Green Bond issuance in renewable energy, housing and infrastructure sectors.”
Growthpoint is a leader in green building and climate change mitigation. Over 86 of its properties are green-certified buildings and have a combined property value of R18.7bn.
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.
The green buildings to which Growthpoint will assign proceeds are all independently certified by the GBCSA and their costs assured by Growthpoint’s auditors. Besides annual reporting on each building’s carbon emissions, energy, water and waste, investors can access Growthpoint’s app which records the water and energy consumption on an ongoing basis.
Growthpoint provides space to thrive with innovative and sustainable property solutions. It is an international property company and the largest South African primary REIT listed on the JSE. It owns and manages a diversified portfolio of 559 property assets, locally and internationally. Growthpoint is a Founding Member of GBCSA, a member of the GBCSA’s Green Building Leader Network, a component of the FTSE4Good Emerging Index and has been included in the FTSE/JSE Responsible Investment Index for eight years running. It owns and co-owns the largest portfolio of certified green buildings of any company in South Africa and is recognised as a leading developer of green buildings.
Young environmental visionaries from the University of Cape Town took first place in the Growthpoint Greenovate Awards for the second year running.
The awards recognise innovative solutions for the property industry to environmental challenges.
Now in its second year, the awards programme is an exciting initiative by Growthpoint Properties in association with the Green Building Council South Africa (GBCSA). It inspires and encourages students of the built environment to discover, explore and invent ways to live more sustainably.
This year’s participants were from the University of Cape Town, University of the Witwatersrand and Nelson Mandela Metropolitan University.
Students were challenged to come up with ideas for any property-related project that makes the way we live greener and our environmental footprint lighter. Groups from each of the participating universities competed internally first and the two top projects from each were chosen as finalists.
The winners were announced at a gala dinner in Sandton Central with keynote speaker, trend analyst Dion Chang of Flux Trends, who warned: “If you don’t take the time to think proactively, you will increasingly find yourself reacting to your environment rather than influencing it.”
The UCT team of Cédric Fournier and Priscilla Nthai, with supervisors Saul Nurick and Abby Street, were named the winners of the Greenovate Awards 2016. They focused on the perceptions of occupants in office buildings that contain green building features and initiatives.
This team of outstanding young green innovators took home R30,000 in prize money. They will also be fully sponsored to attend the GBCSA’s Green Building Convention in Cape Town in 2017 where they will present their research to local and international property professionals and green leaders.
The University of the Witwatersrand team of Nthabiseng Makgabo and Bongiwe Dlamini, supervised by Samuel Azasu, scooped second place with their comparative analysis of the factors that influence the choice between green and conventional buildings in selected nodes in Gauteng. The team earned a prize of R15,000 for their insightful project and tickets to the Green Building Convention in 2017.
The third placed young green thinker came from Nelson Mandela Metropolitan University. Lungela Gcwabaza, supervised by Gerrit Crafford, investigated the obstacles to effective implementation of strategy within quantity surveying firms as a method for enhancing business sustainability in the long run. He won R10,000 and tickets to the Green Building Convention 2016.
Werner van Antwerpen, head of sustainability at Growthpoint Properties, explains: “By nurturing innovation for a greener, healthier, more sustainable environment, everyone wins. The Greenovate Awards is producing pioneering student projects that show new ways to drive green building thinking forward, to ensure a better, greener future. Growthpoint is proud to collaborate with GBCSA, the universities, and their students to provide a platform to shows and grows green innovation.”
Van Antwerpen was part of the judging panel that comprised some of SA’s top green minds, including:
- Thulani Kuzwayo, Managing Executive: Public Sector at Green Building Council South Africa;
- Evan Rice, Business Development Manager for Tesla;
- Martin Smith, Technical Director – Buildings at Aurecon, and;
- Mike Aldous, Associate – Green Building & Sustainability Services/BIM Champion at Mott MacDonald.
Brian Wilkinson, GBCSA CEO, says: “GBCSA is thrilled to partner with Growthpoint for the second consecutive year on the prestigious Greenovate student awards. They recognise and reward some of South Africa’s top students, who are the future green leaders and innovators in South Africa and are set to change the way the world is designed, built and operated for the sake of our environment and future generations to come.”
The ways in which the Greenovate Awards is building a better world go well beyond its annual competition.
Nurturing green innovation, GBCSA has offered discounted Accredited Professional Training at universities since 2013. This has consistently grown each year, expanding from one university and 45 property studies students in 2013 to five universities and over 250 students in property, construction management, architecture, interior design and quantity surveying in 2016.
Donné Atkinson, Education and Training Manager at GBCSA, says: “The Greenovate Awards have certainly added to the motivation to attend the programme. Much of the growth has occurred in the last two years and we expect this will grow even further in 2017. GBCSA is thrilled that, this year, over 250 graduates will enter the marketplace with awareness around how the design, construction and operation of the built environment, when done right, can mitigate against climate change and reduce humankind’s negative impact on the environment.”
The success of the competition will continue to see the awards programme becoming even bigger in future.
Van Antwerpen reports: “Ultimately, the Growthpoint Greenovate Awards programme will be made available to all universities in the country with the appropriate built environment faculties. In addition, in 2017, it will be adapted and expanded to other faculties too, to recognise and encourage environmentally innovative thinking among even more of South Africa’s future leaders.”
Growthpoint is the largest South African primary listed REIT and strives to be a leading international property company providing space to thrive. It creates value for all its stakeholders with innovative and sustainable property solutions. Growthpoint is a Platinum Founding Member of GBCSA and a member of the GBCSA’s Green Building Leader Network, and has been included in the FTSE/JSE Responsible Investment Index for seven years running. It owns and manages a diversified portfolio of 526 property assets including 467 properties in South Africa, 58 properties in Australia through its investment in Growthpoint Properties Australia (GOZ) and a 50% interest in the properties at V&A Waterfront, Cape Town.
Founded in 2008, the Green Building Council South Africa (GBCSA) is one of over 95 members of the World Green Building Council. It exists to inspire the property industry to design, build, operate and tenant better, greener buildings. GBCSA operates in the commercial, residential and public sectors. Its aim is to work with its membership community to sustainably transform the built environment, and strives to preserve the planet for future generations through advocacy, membership, certification and training. The GBCSA is the official certification body for Green Star SA and EDGE residential projects.
As they net better investment returns than traditional buildings.
Over the last eight years, the jury was still out on whether energy-efficient buildings delivered better investment returns than those built to traditional standards.
Up until recently, energy-efficient buildings were said to have better investment fundamentals, but there was a dearth of research to back this up.
But over the last two years, further research has been conducted and is now shedding light on the matter.
In fact, the latest research by the Investment Property Databank (IPD) and the Green Building Council of South Africa (GBCSA) points to energy-efficient commercial buildings being better investments. The research is now in its second year.
The results of the research for the year to December 31 2014, indicate that energy-efficient buildings have higher net income growth and capital value per square metre and higher occupancy levels compared with less efficient buildings.
Vice President of MSCI-owned IPD South Africa Phil Barttram, says energy-efficient buildings consume less energy and water per annum. This is an indication that landlords and occupiers are spending less on operational costs at an energy-efficient building.
The study tracked performance of the 597 most energy-efficient buildings (referred to as the top quartile efficient), which are benchmarked with about 1600 buildings that are not as energy efficient (referred to as the rest of the IPD universe).
The water and energy use of buildings in both categories were pitted against each other.
The buildings had a collective value of R167 billion in excess of 20 million square metres. “It represents over 60% of professionally invested commercial property market in South Africa and we have been collecting the data since 1995,” says Barttram.
Property funds like Emira Property Fund, Delta Property Fund, Growthpoint Properties, Hyprop Investments, Liberty Property, Old Mutual Property, Pareto Limited, Attacq Limited, SA Corporate Real Estate Fund and Vukile Property Fund contributed to the study.
Even on an investment perspective, green buildings are getting better total returns than buildings that are not as efficient.
According to the research, buildings in the top quartile efficient netted total returns of 12.1% compared with buildings in the IPD universe which recorded total returns of 9.4% in one year.
South Africa has over the years rapidly adopted the green building movement in light of the country’s worsening energy crisis, with rolling power outages now seemingly a part of daily life.
In fact, US-based McGraw-Hill Construction in its World Green Building Trends survey notes that South Africa’s adoption of green building trumps most developed regions which include Europe, Australia, the United States, the United Arab Emirates, Singapore and Brazil.
While South Africa is only playing catch-up to its developed and developing counterparts, the survey expects the country’s take up of green building to grow three-fold, from a measured 16% in 2012 to 52% by 2015.
When South Africa’s green building movement started in 2007, the GBCSA only certified one building, but now 100 buildings are certified. “This is a clear sign that green building has gained rapid momentum in South Africa. The Green Star certified projects have also demonstrated world-class, innovative implementations that benefit people, planet and profit,” says GBCSA CEO Brian Wilkinson.
Associate and sustainability consultant at WSP Africa Alison Groves supports Wilkinson’s views saying there is now a deep understanding of the benefits of green building.
Green initiatives – such as replacing conventional light systems with energy efficient lighting, upgrading chillers, investing in rain harvesting technology, waste disposal, solar panel heating – have been largely driven by tenants in buildings.
“Tenants understand that they would rather pay more in their square metres and reduce their risks in terms of energy costs. Those tenants are demanding green buildings because they see the benefits of going green,” Groves says.