Investec Property Fund issues REIT sector’s first sustainability-linked bond
Investec Property Fund has become the first South African REIT to issue a sustainability-linked bond, reflecting the company’s commitment to environment, social, and governance (ESG) principles.
The three-year bond of R800 million, which was widely subscribed for, provides a unique opportunity to raise unsecured capital at a competitive coupon rate and to further unencumber the balance sheet.
In line with the bond’s green credentials, the fund will benefit from a reduction in the coupon of 10 basis points from its initial 190 basis points above three-month Johannesburg Interbank Average Rate (JIBAR). This benefit will be realised when certain pre-agreed performance objectives, linked to the rollout of green building and renewable energy targets, are achieved by the 30th of June 2022.
“We have always been committed to living in society, not off society. The decision to issue the first sustainability linked ESG bond in the REIT sector, is not only a direct result of the strong appetite for IPF paper but is aligned and fully integrated with our ESG strategy” comments IPF joint-CEO, Darryl Mayers.
“This issuance speaks to the underlying synergies within our assets and their alignment to the broader ESG priorities entrenched in the fund. As a pioneer in the sector, we intend to hold ourselves accountable to our prescribed targets and play a leading role in working towards building a more sustainable society.”
The proceeds from the note will be used to refinance debt maturities and will have no impact on Investec Property Fund’s loan to value ratio.
The fund’s ESG strategy sets out to do no harm through responsible property management, optimise long term value creation, proactively minimise risk through ESG principles, and optimise systems without compromising service delivery.
Standard Bank acted as sole arranger and sustainability agent.