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Building relationships beyond funding

IN CONVERSATION WITH: Greg Booyens, CFO, Emira Property Fund

A diversified funding base mitigates risk. But this is only the starting point. Building great relationships with our debt capital providers is as important as the pricing and terms of the funding they offer – and it is a defining feature of our business.

Considering interest is payable before dividends, at Emira we view our debt funders as our most important source of capital.

Debt providers are partners in our success; we are working towards the same goals. Keeping them aligned with our business strategy and outlook supports our strategic agility. It ensures we can move fast to take advantage of opportunities and supports easy conversations when refinancing facilities or accessing new debt.

With this understanding, the Emira management team actively engages our debt providers about our business. From the biannual results presentations given to our funders, including both the South African banks as well as institutional debt investors from the capital markets, together with their credit teams, to frequent one-on-one discussions, we always strive to provide a clear and transparent view inside our business and be available to answer any questions.

In recent years, Emira has gradually evolved. From being a direct owner of around 150 traditional commercial property assets, we have rebalanced our portfolio, expanded our diversification offshore and into the residential to-let property market, and now have a combination of direct and indirect holdings.

We brought our debt funders along with us on this journey, ensuring they had an excellent level of understanding and comfort in our motivation and the impacts on our balance sheet and structure at every turn. Each small step we take along our journey includes measuring our debt and equity capital providers’ comfort with our direction.

Emira’s DMTN programme, one of the oldest in the sector, seldom auctions off debt. Our first choice is to move forward by placing notes with existing funders with whom Emira has built up relationships, where there is appetite.

Looking after our funders not only promotes good pricing but builds a track record that stands Emira in good stead during tough times, as we were fortunate to learn during the pandemic.

At a REIT like Emira, debt is refinanced regularly. Our preference is to have many smaller facilities rather than a few larger ones. While this approach requires more work, it is very worthwhile. It enables more regular engagement with our funders and spreads risk more effectively.

Our obsession with acting with integrity, respect and trust is also reflected in the valuation of our properties, which is the foundation of our business and our funding. We take extreme care that our valuations are true and realistic. Our funders tell us that the understanding we provide on our values and valuation process sets Emira apart.

We are extremely pleased that our debt providers are partnering with us on our sustainability journey. Furthering our funding partners’ and Emira’s sustainability goals, and the greater good, in the course of our business, we recently took up sustainability-linked funding. In 2021, Emira became the third company in South Africa to list a sustainability-linked corporate bond, followed by two further unlisted sustainability-linked bonds. In April this year we concluded an unlisted green bond to refinance R200m of eligible sustainable green projects undertaken by Emira over recent years.

Great relationships with our debt capital providers, built on mutual trust and sharing relevant information, underpin the value we create for all our stakeholders and support Emira to provide great real estate.

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