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BNP Paribas, pension funds commit €200m to Catella residential impact fund

Published on: October 13 2022

The Article 9 fund is one of Europe’s largest cross-border residential investment vehicles, with a portfolio of around 30 properties in seven countries

Energy-positive Elithis Danube tower in Strasbourg, France | Photo by Frederick Florin / AFP

BNP Paribas REIM and a number of German institutional investors, mainly pension funds, have committed €200m to Catella’s residential impact fund, which is investing in the world’s first energy-positive apartment buildings.

The latest closing of the Catella European Residential III Fund (CER III), which is managed by Berlin-based Catella Residential Investment Management (CRIM), takes the fund’s size to €1.2bn.

The fund is one of Europe’s largest cross-border residential investment vehicles, with a portfolio of around 30 properties in seven countries. As an Article 9 fund, it is targeting a significant reduction of greenhouse gas emissions from its properties while also aiming to address social issues.

“At a time of elevated market uncertainty and volatility the need for ‘dual materiality,’ or the combined objectives of achieving climate mitigation and societal returns alongside financial targets is getting even more important in investments,” Michael Fink, managing director at CRIM.

“CER III has a focus on the ‘decarbonisation transition’ in its residential investments and we are also strongly targeting affordable rents,” Fink said. “Catella’s ‘skin in the game,’ or alignment of interests between us and the investors through the fee structure of the fund, also reinforces the third ESG pillar – the ‘G’ for governance.”

Energy-positive homes

Through a joint venture between Catella and French engineering and consulting group Elithis, CER III is investing in the world’s first energy-positive residential towers. Through its use of solar power, these affordable homes produce more energy than they consume.

Elithis completed the world’s first energy-positive residential building in Strasbourg, France in 2018. The annual consumption of CO2 per square metre of the 17-storey, 63-apartment Elithis Danube building is 18 times less than that of existing housing stock in France.

“The world is in a profound transition due to climate change, mounting geopolitical and economic risks and soaring energy costs, which are creating enormous challenges for societies, governments, and investors to manage,” said Casper van Grieken, executive director and head of capital advisors at CBRE Netherlands, which advises CER III on fundraising from international investors.

“These are on top of the longstanding problems of Europe’s structural housing shortage, which is contributing to limited affordable rental accommodation supply.”

Although the Elithis towers are scalable and don’t cost more to build than conventional buildings and institutional investors are keen to invest, a swift €2bn roll-out of 100 energy-positive towers in Europe is being held back by regulation, Xavier Jongen, managing director at CRIM, told a virtual roundtable hosted by urban real estate investment manager Redevco last year.

“The main problem is speed,” Jongen said at the time. “The solution is out there, but what we need is getting the plots, and then having the building permits swiftly run through the administrative process.”