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To help promote sustainability and climate-smart commercial real estate in South Africa, IFC and Redefine Properties Ltd. has announced the issuance of a green bond, with IFC as anchor investor. Redefine will use the bond’s proceeds to improve the environmental sustainability of eligible buildings in its portfolio.

IFC will invest up to 750 million South African rand (about $44.1 million) in the bond to help Redefine reduce energy and water consumption and make other positive environmental improvements in its commercial property portfolio, including office, retail, and industrial space.

The green bond, Redefine’s first, was oversubscribed and raised R1.5 billion South African rand at an auction on 16 September 2022.

The real estate sector is estimated to generate about 40 percent of the world’s CO2 emissions. Redefine, South Africa’s second largest real estate investment trust (REIT), will use the green bond to support the long-term decarbonization of its buildings, which house more than 4,000 tenants and employ more than 195,000 people.

“This green bond diversifies our funding portfolio and amplifies our commitment to placing ESG at the heart of what we do,” said Ntobeko Nyawo, Redefine’s Chief Financial Officer. “Redefine will use the proceeds of this bond to finance only highly-rated green buildings, which is firmly in line with the company’s over-arching, long-term climate-resilient framework.”

“IFC’s partnership with Redefine is in line with our strategy to support climate-smart infrastructure projects in South Africa’s real estate sector,” said Adamou Labara, IFC’s Country Manager for South Africa. “The green bond demonstrates the critical role that capital markets can play in crowding-in more investors for climate-focused financing. This will ultimately support South Africa’s aspirations to transition to a low-carbon economy.”

The green bond, the second issued by a REIT in South Africa, aligns with Redefine's sustainability goals to transform its properties into environmentally sustainable and resource efficient assets. The company has established a long-term target to achieve net zero carbon status by 2050.
 
The green bond also aligns with the International Capital Market Association Green Bond Principles. It was listed on the Johannesburg Stock Exchange (JSE) in the Sustainability Segment, a platform for companies to raise debt for green, social, and sustainable initiatives.

IFC’s investment will be used exclusively to refinance existing green buildings with a Green Star 4 category certification, which is a tool used to rate the environmental impact of buildings, as defined by the Green Building Council of South Africa or the equivalent.