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Fidelity completes €200m first close of second real estate climate impact fund

Published: 9 April 2024

The Fidelity Real Estate Logistics Impact Climate Solutions Fund will invest in Western Europe’s logistics sector with the aim to transform existing ‘brown’ buildings into carbon neutral properties.

The fund plans to buy existing ‘brown’ logistics properties and turn them into carbon neutral ‘green’ buildings | Sulyok on Unsplash

Fidelity International has announced the €200m first close of the Fidelity Real Estate Logistics Impact Climate Solutions Fund (LOGICs) which will invest in logistics real estate across Western Europe.

Rest Super, one of Australia’s largest superannuation funds, acted as a cornerstone investor to the new fund with a commitment of €80m, agreeing to invest an additional €120m in any future closes. 

This is the second real estate climate fund for Fidelity, which manages $776.2bn in assets, having launched its first such vehicle at the end of last year.

With this second fund, the fund manager hopes to accelerate the race to net zero. “There is  an urgent and appealing investment opportunity to help turn brown to green,” Fidelity said.

Eighty-five percent of all buildings in the EU are over 20 years old. In fact, more than 40% of total carbon emissions being emitted come from the built environment, Fidelity said, citing the International Energy Agency.

‘Rare opportunity’

The new fund, classified as an SFDR Article 9 fund, plans to buy existing buildings, and turn them into “high quality assets that are capable of being operated at net-zero carbon”. It will also provide occupiers with new solar panels so they can generate their own green energy.

According to Fidelity’s research, brown logistics buildings are currently priced 20 to 30% cheaper than during their peak in 2022. At the same time, the e-commerce sector continues to grow in Western Europe, while there aren’t enough quality logistics assets on the market. These two factors combined has created “a rare opportunity to deliver outsized returns for modest risk over the next few years”, Fidelity said.

‘Strong returns’

“With logistics properties trading at attractive rates and demand for energy efficient facilities growing, we believe the LOGICs fund will drive rental yields and property values that should translate into strong financial returns while helping to speed up the path to a carbon neutral economy,” said Andrew Lill, chief investment officer at Rest.  

“With approximately €550m of deployable capital within our real estate climate impact strategies, we are excited by the opportunity to take advantage of current market conditions and deliver strong returns as well as tangible carbon reduction within an accelerated timeframe,” said Andrew McCaffery, co-chief investment officer at Fidelity International.

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