First Green Loan in the African real estate sector for Equites Property Fund

The challenge

Equites is the only specialist logistics Real Estate Investment Trust (REIT) listed on the JSE. It has executed its vision of becoming a globally relevant REIT and currently has a footprint in South Africa and the UK. As part of their sustainability strategy Equites wishes, where possible, to improve the sustainability profile of their buildings.

Equites achieved a Green Loan to fund the development and construction of two high specification IFC EDGE (Excellence in Design for Greater Efficiencies) certified green buildings in an attractive industrial node – Meadowview West 19B (for Altron) and Meadowview West 19A (for Digistics). According to the International Finance Corporation (IFC) the real estate sector is a major contributor of energy related greenhouse emissions, accounting for 28% emissions. It is also responsible for consuming more than half of all electricity.

As real estate entity Equites needs to consider how to balance the demand for increased space and new buildings, while minimising their impact on the environment. This balance requires more efficient use of resources.

EDGE is a globally recognised certification which brings speed, market intelligence and an investment focus to green building certification in over 170 countries globally. The EDGE engine has a set of city-based climate and cost data, consumption patterns and algorithms to predict the most accurate performance results.

In South Africa, the SANS 10400-XA Building Energy Efficiency Code is used as a baseline for projects wishing to certify with EDGE. Such projects are required to achieve a minimum of 20% above this standard in the categories of energy, water and embodied energy in building materials.

RMB solution

RMB was appointed as sole arranger and sustainability agent for a R225m Green Loan to fund the development and construction of Equites’ two IFC EDGE certified green buildings.

The RMB Real Estate Investment Banking and Sustainable Finance and ESG Advisory teams collaborated to structure this Green Loan for Equites in compliance with the Loan Market Association’s Green Loan Principles.

RMB’s expertise in finding innovative solutions through funding EDGE certified green buildings enables Equites to execute its sustainability strategy. Equites will be rewarded for their investment in green buildings through an upfront pricing benefit. The certified green buildings will also prove beneficial for tenants by providing long-term utilities savings.

How did this enable the client?

The Green Loan is aligned to Equites’ long-term strategy and commitment to ESG. By obtaining preliminary and final certification on these two buildings, Equites is now positioned to certify many of their new industrial facilities using the EDGE rating.

The Altron building has been awarded EDGE certification through incorporating resource-efficient design and technology choices. These choices resulting in energy savings of 39%, water savings of 21% and 55% less embodied energy. LED lighting and solar photovoltaics were installed to reduce the warehouse’s energy use, while dual-flush water closets and water-efficient faucets were installed to reduce the warehouse’s water use. The resource efficiency of the warehouse is a manifestation of Altron’s commitment to reduce the environmental impacts of its infrastructure.

The Digistics buildings has achieved Preliminary EDGE certification. The design choices made for this project predict energy savings of 31%, water savings of 48% and embodied energy savings of 56%.