Standard Bank And Equites Conclude R2 Billion Sustainability Linked Debt Package

On 08 October 2021, Equites Property Fund Limited (“Equites”) concluded a R2 billion debt, refinance and upsize package with the Standard Bank of South Africa Limited (“Standard Bank”), comprising of an R800m three-year sustainability linked (SL) unsecured listed bond; a £50m two-year SL loan including a £25m upsize; and a R221m three-year loan.

Following Equites’ inaugural R800m SL loan in the real estate sector concluded last year, Equites and Standard Bank have partnered again to convert the 18-month R800m SL loan into a three-year SL bond, with Standard Bank acting as the sole arranger, sustainability structuring agent and investor on a private placement basis; and the upsize of the one-year £25m facility to a two-year £50m SL facility, which is the first pound sterling (“GBP”) denominated SL loan in the SA REIT sector, and the first GBP denominated loan in SA with sustainability linked features.

“This restructure is very much a continuation of our strong partnership with Equites to support them in structuring and investing in their maiden listed SL bond and equally to further back them in their United Kingdom growth ambitions through the additional longer-term GBP SL funding” says Lloyd Anderson, Manager: Real Estate Finance at Standard Bank.

The environmental, social and governance (ESG) commitments under the above facilities are focussed on sustainable building practices, increasing renewable energy usage and promoting supplier enterprise development. Equites has committed to ensuring that all new developments are green certified, that renewable energy consumption across its portfolio of high-grade logistic assets is increased each year, and to increasing its investment with enterprise and supplier development partners as part of Equites’ Ampcore programme.

Each KPI has two sustainability performance targets linking Equites’ all-in cost of debt to their performance in achieving material improvements in the various areas of the business. These initiatives are aligned with Equites’ strategy to ensure the sustainability of its portfolio and the environment in which it operates.

“As part of our focus on becoming a globally relevant REIT, Equites is dedicated to offering our tenants high-quality logistics assets built to exacting green standards and in assisting our tenants in their move towards renewable energy, with all renewable energy generated provided to the tenant at no cost. The inclusion of a KPI that demonstrates our commitment to the social fabric of South Africa through the promotion of our Ampcore programme is clear evidence of the responsibility Equites has undertaken to the sustainable upliftment of black-owned SMMEs,” says Laila Razack, CFO at Equites.

“This transaction reaffirms our commitment to developing sustainable finance solutions as corporates and investors increase their focus on ESG considerations in supporting their communities and the environment,” says Anneke Lund, Executive: Sustainable Finance at Standard Bank.

“In working with Standard Bank on this transaction, we found a partner that understood our commitment to sustainability and with which we could collaborate in designing KPIs that will stretch the commitment of Equites in several spheres of sustainability – green certification of buildings, a rapid expansion of solar PV for our tenants to increase the reliance on renewable energy, and the upliftment of small enterprises through our Ampcore ESD programme. The alignment of our long-term strategy of sustainability in both SA and the UK with our debt financing is an imperative for Equites, and this transaction clearly demonstrates the commitment of Equites to ESG,” says Warren Douglas, Head of Treasury at Equites.

ESG performance is both a financial and ethical priority and is driving the equity investment agenda. Companies that operate in a sustainable manner tend to have lower risk profiles and outperform those that don’t over the long term. For this reason, demand continues to grow for sustainability-linked financing facilities that can offer clients the opportunity to directly fund their ESG improvements; or to refinance existing general corporate funding to deliver a socio-economic impact in clients’ operational environment and surrounding communities.

“Standard Bank is proud to have acted as the sole sustainability structuring agent, arranger and investor/debt provider in respect of this debt package. The collaboration across product areas in providing a holistic solution to the client in support of their growth and ESG ambitions is core to Standard Bank and the Real Estate Finance team strategy,” says Joan Solms, Executive: Real Estate Finance at Standard Bank.

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