Fidelity International raises €200m with second real estate climate impact fund

9 april 2024

Fidelity International (“Fidelity”) today announces the launch of its second real estate climate impact fund, the Fidelity Real Estate Logistics Impact Climate Solutions Fund (the “LOGICs” fund), successfully raising €200m during its first close, supporting an accelerated energy transition in the real estate sector. Rest Super, one of Australia’s largest profit-to-member superannuation funds, is a cornerstone investor in the Fund and is committing €80m to the Fund at first close, with an agreement to commit up to a further €120m to the Fund over the subsequent closes.

With over 40% of total carbon emissions being emitted from real estate, the asset class plays a pivotal role in the race to net zero. But with 85% of buildings in the EU over 20 years old, there is an urgent and appealing investment opportunity to help turn brown to green.

The LOGICs fund, which will invest solely in the logistics sector across core Western European markets, will follow a value-add approach of acquiring existing assets with the intention of refurbishing and repositioning to deliver high quality assets that are capable of being operated at net zero carbon. In addition, through the installation of solar panels, occupiers have the opportunity to generate and deliver their own source of green energy.

As a Sustainable Finance Disclosure Regulation (SFDR) Article 9 fund, LOGICs has a comprehensive climate impact framework for the refurbishment of real estate, which seeks to leverage and align with external frameworks and certifications, including the EU taxonomy, to ensure its approach to delivering climate impact is transparent and measurable. Each asset purchased will have an accelerated pathway to net zero carbon emissions through the firm’s refurbishment plans.

According to Fidelity research, brown logistics buildings are currently trading at an attractive entry points, 20-30% below peak valuations in 2022. Meanwhile Western Europe is benefiting from multiple demand tailwinds including the continued growth of e-commerce and a post pandemic focus on supply chain resilience. With supply of quality logistics assets constrained, Fidelity anticipates further strong rental growth for well-located, green warehouses. These two factors combined creates a rare opportunity to deliver outsized returns for modest risk over the next few years.

The news follows the launch of the Fidelity European Real Estate Climate Impact Fund at the end of 2023.

Andrew McCaffery, co-Chief Investment Officer, at Fidelity International, comments: “The LOGICs fund launch is a great example of partnering with our clients to jointly develop solutions to meet their evolving investment needs. We are pleased to see strong and growing client interest for our climate impact strategies within real estate, supporting the energy transition in the sector through accelerating purchased assets’ pathway to net zero while offering compelling investment returns to our clients. Following a strong first close, investors will have the opportunity to invest in the Fund’s second close towards the end of the year.

“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.”

Andrew Lill, Rest’s Chief Investment Officer, comments: “Rest is pleased to join Fidelity to launch the LOGICs fund as its cornerstone investor. We believe its focus on climate impact offers a fantastic opportunity to benefit Rest’s approximately two million members, including the more than a million who are younger than 30 and will retire into a post-2050 net-zero world.

“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.”

Source: Fidelity