Redefine Properties noted an extreme risk of baseline water stress throughout most of its South African portfolio, during its 2023 ESG investor update.
Anelisa Keke, chief sustainability officer at Redefine, said, “While there are signs of improvement, the environment in which South African REITs are operating remains challenging. Our ESG strategy responds to sustainability-related risks through scalable interventions, providing an opportunity to not only de-risk our portfolio but to create and preserve value for ourselves, our tenants, and other key stakeholders.”
Anelisa added that Redefine’s water reduction strategy had already resulted in significantly lower water consumption, and the company is targeting a cumulative 140ML reduction of its water footprint across its SA buildings.
This will be achieved through a combination of initiatives that include rainwater harvesting facilities (with five new facilities planned for Gauteng), the rollout of smart water meters, and the installation of Propelair toilets (which use up to 80% less water per flush than ordinary toilets).
In addition, the Real Estate Investment Trusts (REITs) said its retail-centric Polish property investment platform EPP has several environmental transition risks, with recent and upcoming EU regulations requiring buildings to improve their energy performance levels in the next few years.
Green leases
Meanwhile, Redefine’s energy management strategy, which responds to the elevated risk of extended loadshedding and rising energy prices, is focused on reducing electricity consumption through behavioural interventions, energy efficient lighting retrofits, and renewable energy installations. Redefine has a solar photovoltaic (PV) footprint of 40.2MWp currently installed in SA, with 39.6MWp of potential rooftop solar PV installations identified across the EPP portfolio.
The company, which obtained its first Green Star SA certification in 2012, currently has 186 active Green Star SA certifications across the South African portfolio, and new buildings will meet net zero standards from 2030 onwards.
All employees are expected to be trained on green building certifications in South Africa in 2023-24.
Initiatives such as the green lease rollout are earmarked as revenue drivers.
“We have evidence of international tenants and brokers prioritising Green Star rated offices, which makes our buildings more competitive in a tough environment,” Anelisa said.
“Our environmental efforts are driving cost reductions. We are starting to see an increase in net operating income as a result of certain on-site environmental initiatives, which count positively towards valuations,” she added.
Tenants and the carbon transition
Tenant buy-in and cooperation are essential for the company to achieve its energy, water and waste reduction goals and Redefine has engaged several national retailers, who occupy a combined gross lettable area of 574 613sqm, to collaborate on environmental and social initiatives.
Similarly, the ability to finance the low-carbon transition of its assets is critical. Redefine recently issued a green bond that was oversubscribed, resulting in an upsized allocation to R1 billion across three, five and seven years. The proceeds raised will be used to refinance eligible green assets (across its property portfolio) that align with the group’s overarching, long-term climate-resilient framework.
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