South African listed real estate investment trust (REIT), Fortress REIT, has listed a total of R900 million in sustainability-linked bonds on JSE to enable it to scale up renewable energy developments at its properties.
The JSE has granted Fortress the listing of a 3-year sustainability-linked bond of R495 million, and a 5-year sustainability-linked note of R405 million.
“There is massive demand for renewable energy from our tenants”
Steven Brown, CEO of Fortress REIT
The listing is in alignment with Fortress REIT’s strategic ESG plan. Although the bonds do not have specific use-of-proceed requirements, the company intends to utilise the funds to install solar energy systems across its retail and logistics portfolios in South Africa.
Commenting on the listing, Ian Vorster, CFO of Fortress REIT said, “sustainability-linked bonds have increasingly been used around the world as a source of financing for renewable energy development, designed with compliance requirements and measurable economic returns to investors, while mitigating climate change.”
Fortress REIT to reduce reliance on Eskom electricity
The deployment of renewable energy at Fortress’ properties will allow the real estate company to meet its targets for solar energy, as well as reduce its reliance on electricity from state utility Eskom. The renewable energy projects will also reduce the company’s carbon footprint.
“The target measurement dates for the 5-year note are 30 June 2022 and 30 June 2024. Fortress has committed to increasing its renewable energy installations and megawatt outputs,’ said Ian Vorster, CFO of Fortress REIT.
“The renewable energy target will be achieved through an increase in solar energy installed measured in megawatt-peak (MWp) with respect to the South African portion of its portfolio. The target is for a 2.2MWp increase at the first target date in June 2022 and then a further 3.6MWp in June 2024 resulting in a cumulative 5.8MWp installation,” added Vorster.
The new solar installations will add to Fortress’s current solar energy programme which generates 4.735MWp from 10 installations. This makes its combined solar energy output of 10.7MWp by 2024 one of the largest from the local REIT sector.
Investor appetite for the green bonds
Steven Brown, CEO of Fortress REIT said, “The confidence shown by investors to raise these funds and allow Fortress to continue the work that we have started in solar energy projects is highly encouraging for us. It further demonstrates the commitment we have to our tenants, surrounding communities, shareholders and stakeholders to accelerate the progress we have made on the ESG front.”
“There is massive demand for renewable energy from our tenants. This is primarily driven by their desire to play their part in mitigating greenhouse gas emissions and contributing to a more sustainable future. Clearly, in sunny South Africa, solar forms the core of this move to sustainable energy solutions” concluded Brown.
