The challenge
Emira Property Fund (Emira) is a diversified Real Estate Investment Trust (REIT) company, with a property portfolio of predominantly South African assets and a growing component of offshore assets. The company is focused on growing the quality and value of its property portfolio in order to sustain and enhance its distribution growth to its shareholders.
Emira had an upcoming ZAR bond maturity and was looking to raise R300m by means of a bond. However, the property sector has been impacted quite heavily by the COVID-19 pandemic with investors having limited appetite for unsecured REIT paper.
RMB solution
RMB has had a long-term relationship over many years with Emira and was a natural choice for advising on this funding. The RMB Debt Capital Markets team explored an alternative pool of liquidity, positioning a sustainability-linked bond as a solution.
The sustainability-linked bond was in fact oversubscribed due to demand for this kind of investor opportunity where a positive impact on Environmental, Sustainability and Governance (ESG) can be made. Emira opted to downsize the issuance amount to raise R380m as they didn’t require additional funding at the time.
The RMB Sustainable Finance and ESG advisory team worked with Emira to determine the performance targets for the issuance which are in line with their strategic objectives on energy and water usage. The KPIs on ESG targets included increased use of renewable energy, reducing energy and water consumption and reducing carbon emissions.
How did this enable the client?
The Sustainability-linked Bond (SLB) enabled the client to gain access to more liquidity and achieve duration to refinance their upcoming bond maturity. The performance-linked pricing on the SLB means that the underlying credit spread will reduce as predetermined ESG targets are achieved, and Emira will reach their strategic sustainability goals as well.
The 3 000 MWp should result in around 5 300 tons/annum of avoided carbon. Justin Bowen, National Development Manager and Head of Sustainability for Emira, says: “Our comprehensive environmental sustainability strategy and transparent disclosure support Emira’s purpose of being a provider of great real estate. Properties that are energy and water-efficient, and use more renewable resources, ultimately assist our tenants and our business to contain utility costs and lighten our environmental footprints. We are thrilled to include our funders as leading actors in sustainable finance and key role players in our value chain of positive environmental impacts.”.
