Absa and property group Exemplar REITail partner to pioneer first syndicated sustainability-linked use of benefit loan

Johannesburg, 8 November 2021: In a landmark transaction highlighting confidence in the township and rural commercial property, Absa Bank acted as Sole Global Coordinator and Bookrunner in the strategic refinancing of Exemplar REITail Limited’s R3.135bn debt package.

The transaction includes R1.791bn of ‘sustainability-linked' loan, with margin reductions, applied subject to the Borrower’s successfully achieving pre-agreed environmental targets (solar energy, carbon offset, and water intensity). Uniquely, the facility includes use-of-benefit provisions, for which the Borrower has undertaken to utilise any interest cost savings arising from the sustainability-linked loans to invest in community initiatives in their property catchment areas.

Exemplar is a market-leading developer, owner, and manager of the township and rural retail shopping centers in South Africa. The Mall of Thembisa, developed by McCormick Property Development and one of Exemplar REITail’s recent acquisitions, was earlier this month named the ‘Best Retail Development’ and awarded a 5-star nomination by the judging panel of the International Property Awards.

The R3.135bn senior, secured, syndicated debt package establishes a flexible platform to support Exemplar’s future growth. Beyond refinancing existing debt, the facilities will be used for capital expenditure and will increase Exemplar’s flexibility by increasing available working capital for the business.

The transaction was well supported by the market, garnering an appetite that exceeded triple the original transaction size. As a result of this strong demand, the transaction was upsized to re-finance the majority of Exemplar’s debt. In addition to its role as Global Coordinator and Bookrunner for the transaction, Absa Commercial Property Finance provided over 50% of the funding requirement and is acting as facility agent.

Jason McCormick, Exemplar REITail Limited CEO, comments: “We are delighted with the successful conclusion of this landmark transaction highlighting the confidence of the market in the strength of the Exemplar business. The proceeds of this transaction have, in part, been earmarked for the continued expansion of the business, helping us to provide retail services to more of the most under-serviced regions of our nation. We have always put our local communities first which is once again emphasized by this transaction. All interest savings generated will be invested directly into our communities, ensuring their ongoing upliftment and development in-line with our #ChangeforGood mantra.”

Klaus-Dieter Kaempfer, Head: Commercial Property Finance and Equity Investments, Absa said: “This landmark transaction is a great example of how Absa CIB is working in partnership with clients, acting as both lead arranger and funder. Despite the challenging market backdrop in the commercial property sector, the fundraising was a huge success, and a testament to the quality of the Exemplar’s business and management, as well as our expertise in managing capital markets transactions of this nature.”

“We are also particularly proud of our leading role in developing an innovative new Sustainable Finance solution, whereby the benefit received by the Borrower for meeting environmental KPI’s is reinvested into CSI initiatives, allowing lenders and the borrower to play a role in addressing the challenges in the societies within which we operate.”