The asset manager has invested in assets based in the Netherlands and Spain, which it will transform into carbon neutral properties, it says.
Fidelity International has made the first investments for its logistics climate impact fund, acquiring three assets in the Netherlands and Spain.
The Fidelity Real Estate Logistics Impact Climate Solutions fund (LOGICs) invests in Western Europe’s logistics sector, with the aim to transform existing ‘brown’ buildings into carbon neutral properties.
Speaking to Impact Investor, Adrian Benedict, head of real estate solutions at Fidelity, said the fund aims to accelerate the pathway to net zero by retrofitting existing buildings to operate at net zero emissions, completed within 12-18 months.
Benedict said that the fund aims for a 30% plus reduction in primary energy demand with some assets achieving substantially higher reductions, which he said will translate into significant carbon savings.
“The fund’s impact measurement considers the emissions from the building operations, including those generated by the future occupiers, thereby accounting for scope 1, 2 and 3 emissions. This approach can then be adopted by other real estate portfolios to capture the full carbon impact,” he said.
Investment opportunities
The investments come at a time when demand for net zero carbon properties is growing while availability is limited, driving strong rental growth, Benedict added.
In addition to this, there are real drivers of change in the space. Eighty-five percent of all buildings in the EU are over 20 years-old. Currently, 40% of total carbon emissions come from the built environment, Benedict told Impact Investor, which, he said, provides the real estate sector with a chance to lead the way in the energy transition.
LOGICs is investing in two assets in the southern area of the Netherlands, in Tilburg and Roermond, directly on the Belgian and German borders respectively, and one in Ontígola, Spain, approximately 40 minutes from Madrid city centre.
In addition to buying existing buildings and turning them into assets that are capable of being operated at net-zero carbon, the fund also provides occupiers with new solar panels so they can generate their own green energy.
Aligning financial returns
LOGICs plans to align financial performance with impact by charging higher rents due to the fact that the occupier will benefit from lower operating costs, which Benedict describes as a “win win”.
Earlier this year, Fidelity announced the €200m first close of the fund, as reported by Impact Investor.
Rest Super, one of Australia’s largest superannuation funds, acted as a cornerstone investor with a commitment of €80m, agreeing to invest an additional €120m in any future closes.
Neil Cable, the head of European real estate investments at Fidelity International, said: “Following the successful first close for the LOGICS fund which raised €200m in capital commitments earlier this year, and with plans for a second close well under way, we are excited by the strong pipeline of attractively priced assets in the market at the moment, with all three newly acquired assets purchased at attractive entry points with solid market fundamentals.
“The Netherlands and Spain are two core focus areas for us, but we are also exploring further opportunities across western Europe including the UK, Germany, France and Belgium, with appealing prospects identified in our target markets.”
