Sustainability is central to Mexican homebuilder Vinte – and underpins its financing. Its CFO Domingo Valdes and head of investor relations Gonzalo Pizzuto explain
Environmental Finance: Can you introduce Vinte to those readers who aren't familiar with the company?
Domingo Valdes: We are a Mexico-based, publicly-traded homebuilder and land developer, set up in 2001, that has always tried to approach things differently and innovatively. That regards being sustainable, providing positive impact for our investors and lenders, and now by developing and supporting proptech [property-technology] and fintech companies. We have developed more than 50,000 homes, growing revenues by an average of 14.8% each year, and have paid dividends for each of the past 14 years.
We have been described as a 'shared value' business. We work to ensure that we have a positive social and environmental impact on all our stakeholders, including households – our customers – the government and municipalities, financial institutions and shareholders.
EF: What role does sustainability play in your financing?
DV: We have had the support of impact investors since 2008 when the IFC [the International Finance Corporation] invested in our equity.
Since 2018, when we issued our first sustainability bond, we have issued MXN $1,900 million ($96.5 million) in long-term sustainability bonds on the Mexican Stock Exchange. Around two-thirds of our overall borrowing is classified as green or sustainable.
Our sustainability performance has been very important to our ability to raise funds. For example, at the height of the Covid pandemic, at the end of 2020 when there was still no vaccine, we were able to issue a seven-year sustainability/Sustainable Development Goals (SDG) bond acquired by German impact investor DEG and equity to the Danish SDG Investment Fund: we were only able to do that because of the business model, and the impact we can show we deliver.
As a concrete example, we have long-term fixed- and variable-rate loans with IFC and IDB Invest, where the rate drops by 20 and 25 basis points respectively if we successfully build a pre-agreed number of homes with EDGE certification. And once BBVA saw the impact we could quantify and deliver, their bankers were prepared to reduce the spread on a loan by 55 basis points. That shows the demand among investors and lenders for impact.
EF: How do you measure the impact the bonds deliver to their buyers?
Gonzalo Pizzuto: Our KPIs are very much aligned with what we already do as part of our business model. Most of our housing meets the EDGE certification, which tracks energy, water and materials savings. Vinte was the first homebuilder worldwide to certify EDGE homes and we have become the largest EDGE certifier, with 8,299 EDGE homes. We report the number of homes we build that are sold to low- and medium-income buyers. We track the infrastructure we build, such as schools, roads and water treatment plants. We build and donate parks within our developments, and we measure our homes' carbon, water consumption and energy savings through materials used.
We contribute to 14 of the 17 SDGs. However, we included long-term KPIs linked to our last sustainability bond, VINTE 20X SDG, related to eight SDGs according to the SDG Impact Standards, with positive impacts either classified as Bs, providing benefits to stakeholders, or Cs, contributing to meeting the goals.
EF: How challenging have you found the sustainable bond issuance process?
GP: Because our business model has always been focused on sustainability, we were easily able to comply with the various bond standards. The main requirement is that we had to develop our sustainability framework, but again, the KPIs and commitments involved are very much aligned with what we already do as a company. Our framework received a favourable second opinion from Sustainalytics, HR Ratings here in Mexico, and PCS.
DV: Rather than a challenge, we have found sustainable bond issuance to be an advantage. It attracts investors who would not have been interested otherwise. This is particularly the case for our sector, where the history of some other former players has led to a bad reputation.
EF: What's next for Vinte and for your sustainable finance programme?
DV: We are moving into proptech and fintech, creating and supporting companies that use new technology and innovative business models to tap into other residential property verticals, from mortgages, renting and rent-to-buy programmes to the resale of the houses we have built.
We are particularly interested in bringing underserved parts of the population into the formal economy.
In Mexico, rents are mostly informal – it's an individual or a small investor renting a property and collecting rent in cash, without going through the banking system. We've invested in a company, Homie, that provides a platform to turn these into bank transfers. That means the owner of the apartment is able to get access to credit and to help create a more formal economy.
We are also working with IFU - a development financial institution owned by the Government of Denmark - and P4G - an impact investment initiative - to look at the feasibility of developing net-zero housing communities. We are talking to a private equity firm about financing that, and we may well look at creating a special-purpose vehicle so we can also participate. The challenge will be to make net-zero housing programmes profitable; being a landowner provides the opportunity to build schemes that can achieve net zero and which are also economically sustainable.
For more information, see: vinte.com.mx