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Archives for August 2024

Emira takes 25% stake in Polish company DL Invest Group

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Emira takes 25% strategic stake in Polish logistics-focused property company DL Invest Group

Emira Property Fund (JSE: EMI) has announced a strategic investment in the Luxembourg-headquartered Polish property developer and investor DL Invest Group, marking a significant milestone in the SA REIT’s international investment strategy. With a €55.5 million investment, Emira has acquired an effective 25% initial stake in DL Invest Group, which has a gross asset value (GAV) of approximately €730m and a net asset value (NAV) prior to Emira’s investment of approximately €278m. Emira’s equity interest has a face value of €101.5 million.  Emira has also secured the option to acquire a further interest for €45.5 million. If exercised, this second tranche will result in Emira holding 45.0% of the issued shares of DL Invest Group.

This initial strategic move will immediately increase Emira’s international investments to 32% of its portfolio — with 19% in the US and 13% in Poland — while 68% remains in South Africa, further strengthening its investment diversification.

Geoff Jennett, CEO of Emira Property Fund, notes the company has timed its market entry with the right deal. “We’ve taken the time to find the right partner, and for us, this is the right way to enter this economy at the right time. This method of capitalising on opportunities in the growing Polish economy aligns with Emira’s co-investment model, which the market is familiar with, where we mitigate risk as a minority partner with solid protections paired with an established local specialist seeking similar outcomes, resulting in informed investment decisions and improved returns.”

DL Invest, a wholly owned subsidiary of the DL Invest Group, controlled by Mr Dominik Leszczynski, has been active in the Polish commercial real estate market for 17 years, since 2007. It boasts a robust portfolio of circa 50 properties, including large logistics facilities (75%), small retail parks (15%), and mixed-use office/retail spaces (10%), with a strong multinational tenant base. Its significant and attractive portfolio of assets is internally managed by approximately 232 employees who make up the founder-led private company. It is a long-term property investor and a dynamic young business entering its next phase.

The capital injection provided by Emira will fuel DL Invest Group’s ambitious logistics warehouse development pipeline and propel it towards becoming a €1 billion business.

For Emira, the investment has an attractive return profile, with a minimum Internal Rate of Return (IRR) on a 5 year basis of approximately 20.9% in Euros, yielding at least 7.2% in cash per year, escalated annually by the Harmonised Index of Consumer Prices for the European Area (HICP) of between 2% and 4%, with the balance on redemption. Emira will fund the investment from its current balance sheet using available debt facilities and proceeds from recently announced disposals.

Ensuring active participation in strategic decisions, Emira will have a director’s seat and an observer’s seat on the DL Invest Group board. Emira listed property experience complements DL Invest Group’s on-the-ground expertise in Poland real estate, creating strong synergies and a promising partnership. Emira has committed to a minimum five to six-year initial investment period but, if both parties agree, the partnership can continue beyond this timeframe.

“For Emira, taking a stake in DL Invest Group provides security of sector, country, company, and returns – we’re not only excited about the diversification for Emira but we are also very excited about co-operating with DL Invest Group to maximise what we can achieve by playing to our strengths together,” says Jennett.

Growthpoint gears up for certified renewable energy to offices

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In a first for South Africa, Growthpoint gears up for certified renewable energy rollout to offices

Pioneering a greener future for South Africa, Growthpoint Properties (JSE: GRT), the country’s leading real estate investment trust (REIT), is set to transform the commercial real estate landscape by introducing a clean, green energy benefit scheme called e-CO2 at 10 of its properties in Sandton, Johannesburg. This significant milestone is the next step in the rollout of its innovative renewable energy transition – a first for South Africa.

With all major elements already in place for the groundbreaking scheme to debut in July 2025, Growthpoint will deliver the first green energy to its office buildings through wheeling, reducing carbon footprints and generating Renewable Energy Certificates (RECs) for tenants using the latest blockchain technology. The move establishes Growthpoint as a trailblazer in the renewable energy field by introducing a new offering for the commercial real estate sector in South Africa.

The Growthpoint e-CO2 green energy benefit scheme (e-CO2 is short for electricity minus carbon dioxide and pronounced “eco two”) is an innovative solution that will deliver green energy through wheeling from multiple renewable sources — water, wind, sunshine — directly to commercial properties. It is made possible by Growthpoint’s Power Purchase Agreement (PPA) with Etana Energy.

At the end of 2023, Growthpoint signed the landmark PPA with licenced electricity trader Etana Energy to wheel electricity generated by independent power producers to its buildings in several locations across the country. Wheeling involves the buying and selling of sustainably sourced electricity between private parties, using the existing transmission or distribution network.

Since this can be done over long distances, it gives more users greater access to renewable energy, which is an especially scarce commodity for offices in central business districts. Buildings in these areas, almost without exception, have insufficient roof space for meaningful on-site renewable energy production.

Through the agreement with Etana Energy, Growthpoint has secured exclusive rights to purchase all of the roughly 30GWh that will be generated annually by a hydroelectric power plant developed and operated by Serengeti Energy. The hydroelectric project, which will effectively generate 24/7 baseload power, is located on the Ash River within the Lesotho Highlands Water Scheme (LHWS) near Clarens in the Free State. Construction of the plant is well underway as it is readied to commence operation officially on 1 July 2025.

Following this, the majority of wind and some solar production from Etana’s signed generating portfolio will be added to the grid from 2026, and further sources could be added in future.

Paul Kollenberg, Growthpoint Properties Head of Asset Management: Offices, says: “This agreement secures us a significant 195GWh of clean electricity annually for Growthpoint and our tenants at specific buildings, and represents an important step forward in our sustainability journey. Over the past decade, we have prioritised the advancement of environmental, social and governance (ESG) strategies, and we understand how important it is for our clients to do likewise.”

Commitment to sustainability across its supply chain and for SA Inc.

Environmental sustainability is at the core of Growthpoint’s business, which has been at the forefront of integrating green buildings as an accepted practice in the commercial property sector. It is committed to creating sustained value by integrating ESG into corporate strategy.

Growthpoint’s climate commitment target is being carbon neutral by 2050. By committing significant resources to drive this within its operations and across its supply chain, Growthpoint is setting a precedent for sustainable business practices, enabling other businesses to do the same, and supporting long-term cost savings for its clients.

Delivering savings and ESG benefits to users

Being part of the e-CO2 green energy benefit scheme makes it easier for businesses consuming clean, wheeled power to achieve their ESG targets because at least 70% of their electricity will be from renewable sources such as wind, hydro and solar. Depending on availability, a select few businesses will also be able to elect to receive 100% renewable energy. Growthpoint has already started registering businesses eager to receive clean, green energy to meet their environmental goals.

Werner van Antwerpen, Head Corporate Advisory at Growthpoint, explains, “Opting into e-CO2 gives users access to certified RECs that can be used for annual emission reduction in ESG reporting to contribute towards tenants’ environmental goals or can be traded in the open market.”

Consuming electricity in this way can significantly reduce a company’s Scope 2 emissions (as outlined in the Greenhouse Gas Protocol), which include indirect carbon emissions from electricity used by a company. Scope 1 involves direct emissions, while Scope 3 covers associated and indirect emissions in the supply chain. All three are essential to address in the journey to net zero carbon emissions.

Building occupants also benefit directly from e-CO2 in terms of a reduction in the cost of occupation. The tenants’ monthly renewable electricity allocation is used to calculate the benefit, and the longer a tenant stays in a building, the greater the savings.

“Growthpoint is also passing on cost benefits it receives from signing the PPA to the tenant. The cost benefit for a tenant opting for e-CO2 is the difference between the full increase in the electricity price applied by the local municipal authority or Eskom approved by NERSA annually and a fixed escalation rate for the renewable energy part of their electricity cost over the duration of the lease. This guarantees long-term savings. The longer your lease, the more the cost benefit saving becomes each year,” says Kollenberg.

Users at qualifying properties will receive their power as they always have, through the existing power grid. While this does not directly shield them from load shedding, Growthpoint is increasing generating capacity in the larger South African electricity network, reducing the likelihood of load shedding in the long term

e-CO2 is initially available for new leases or renewals only in specific jurisdictions and to select buildings within the Growthpoint portfolio, but this will be expanded over time. The first buildings part of e-CO2 – all located in Sandton – are 138 West Street, The Annex, The Place, Fredman Towers, The Towers, Grayston Office Park, Sandown Mews, 12 Alice Lane, Advocates Chambers and Pinmill Farm.

“We are incredibly proud of this innovative initiative, made possible by a visionary team, dedicated partners and many passionate and talented people over a number of years. It not only benefits the immediate occupants of Growthpoint’s properties but helps to create a brighter and more sustainable future for South Africa,” concludes Kollenberg

Growthpoint begins green office refit for Ninety One

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Growthpoint Properties (JSE: GRT) has commenced construction on a green office refurbishment of its 36 Hans Strijdom Building, the Cape Town headquarters of Ninety One (JSE: NY1), in a move that reinforces both companies’ commitment to the Cape Town CBD and to sustainability.

Ninety One, a global investment manager with South African roots, has been based at the Growthpoint-owned building in the Cape Town Foreshore for over two decades. Ninety One evaluated a number of options for its offices, including new construction, as its co-tenant in the building prepared to move to new premises. Its decision to remain at 36 Hans Strijdom was strongly driven by its net-zero carbon aspirations.

Growthpoint welcomed the move, committing to an extensive green revamp of the property as Ninety One signed a 15-year lease for the building’s entire 12,800sqm of lettable area. Growthpoint has been at the forefront of environmental innovation in the property sector in South Africa, establishing green building as an accepted practice in the local commercial property sector and now driving the adoption of renewable energy in this space. Its own net-zero goal is to be carbon neutral by 2050.

Paul Kollenberg, Growthpoint Head of Asset Management: Offices, comments, “At Growthpoint, we are thrilled to continue our longstanding partnership with Ninety One. Remodelling this landmark building to the highest environmental standards is a testament to our mutual vision for a more sustainable future.”

Growthpoint’s refurbishment of 36 Hans Strijdom is being guided by sustainability goals rather than appearances, so while it will essentially deliver a new, lower-carbon building, the changes will mostly be visible from inside the building.

To begin with, a significant amount of embodied carbon is being salvaged by re-using of the entire building structure. Among the environmentally friendly building improvements are an on-site solar plant, energy-efficient displacement air conditioning and high-performance glazing. Energy-hungry escalators will be replaced by circulation stairs in the new layout to reduce power consumption.

Furthermore, 36 Hans Strijdom was the first building in the Mother City to receive clean, green energy wheeled via the city’s energy grid, as part of the City of Cape Town’s wheeling pilot project. This is possible thanks to Growthpoint’s partnership with licenced electricity trader Etana Energy, which is a selected pilot participant. Solar energy generated at Growthpoint’s The Constantia Village shopping centre is already being exported for use at the long-term home of Ninety One.

Growthpoint’s investment in this green refit demonstrates its continued belief in the value of the Cape Town CBD and in the power of projects such as this to support sustainable built environments. Growthpoint owns 360,000sqm of offices in the Western Cape.

“Choosing to refurbish rather than relocate cements our commitment to a vibrant Cape Town CBD,” says Thabo Khojane, MD of Ninety One. “At the same time, it was imperative for us to ensure we inhabit a more energy-efficient environment in line with our drive to achieve net zero by 2050.”

Commenting on their decision to sign a 15-year lease for the entire lettable area, Khojane says, “Ninety One is a growing global business. This building has the space to accommodate a growing staff complement, as we’re increasingly onshoring many of our global roles for South Africans, thus creating much-needed jobs locally.”

Kollenberg adds, “Green office refits such as this one help lower carbon footprints and save energy. These efforts revitalise standing structures and create modern, sustainable spaces that contribute positively to their surroundings. By focusing on sustainable practices, we aim to enhance the urban landscape while reducing environmental impact.”

Construction will take approximately 12 months to complete, with the building’s milestone installation of its new flush-glazed facade taking place in the final quarter of this year. Ninety One has relocated to temporary offices for the construction period and will return to its greener home upon completion, which is scheduled for July 2025