Vukile’s CEO, Laurence Rapp, said the green bond would help to further align their financial strategy to positive environmental and social outcomes. Picture: Nokuthula Mbatha/Independent Newspaper
JSE-listed Vukile Property Fund has secured R1.1 billion funding in green and sustainability-linked loans from Absa for use in the refinancing of existing debt facilities.
A combination of the defensive nature of Vukile’s portfolio and tenant mix, dominance of its assets, and active asset management activities continue to deliver excellent results for the company, despite the sluggish economy putting a squeeze on some tenants.
Vukile on Friday said that the fresh financing would be used as part of its “refinancing process for existing debt”, specifically to the firm’s solar PV project, in addition to its sustainability targets.
The real estate investment trust (REIT) has identified reduction of carbon emissions, boosting water savings and educating property professionals among its environmental and society initiatives, tied to its sustainability reporting targets and broader environmental, social and governance (ESG) strategy.
Vukile’s CEO, Laurence Rapp, said this was helping to further align their financial strategy to positive environmental and social outcomes, especially as interest rates from this were directly linked to the achievement of present targets.
“This sustainability-linked loan is a first for Vukile and represents a significant milestone in our ongoing commitment to sustainability,” he said.
Absa doubled up its roles to also include the sole sustainability coordinator as well as funder.
This aided the transaction’s standing under Loan Market Associations’ green loan and sustainability-linked loan principles.
Vukile’s retail vacancies excluding retail offices trended down to 1.2% from 1.4% in the year to end of 2023, as it continues to experience strong demand for space across all segments.
Shares in the company slid 0.68% on the JSE on Friday to R14.59 although in the past half year, Vukile’s stock was 16.72% stronger.
Absa’s head of sustainable finance, Heidi Barends, said the lender had partnered with Vukile for the latest financing round “to ensure market leading performance indicators” were instituted into the arrangement.
Barends said these were relevant to the property sector and aligned with Absa’s business strategy.
“By combining environmental and social objectives, we’ve set a new standard for sustainable investment. Vukile is clearly committed to sustainability and we’re proud to have advised it on this strategic transaction,” Barends said.
Vukile recently said its exposure to Pick n Pay was limited to 6.2% of its total rent collections, with the struggling South African grocer now restructuring its stores and turning others into its value offering Boxer, which would be spun off and separately listed.
The REIT has total assets valued at around R40bn, with 40% of these in South Africa and 60% in Spain.
The Spanish assets are held under its 99.5%-owned Madrid-listed subsidiary, Castellana Properties Socimi.
Vukile’s head of treasury, Maurice Shapiro, said Absa had played an important role in delivering a fit-for-purpose innovative solution that helped align Vukile’s funding strategy with its ESG goals.
“Vukile is committed to making a difference for our communities, and we are pleased to partner with Absa,” Shapiro said.
“Vukile is committed to advancing positive impacts through renewable resources, water-saving initiatives and education of property professionals in South Africa.”
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