Fidelity International just launched a Real Estate Logistics Climate Impact Fund (LOGICs Fund), supported by a cornerstone investment from Rest Super. The Fund will acquire logistics properties across core Western European markets and redevelop them into high-quality assets that can be operated at net-zero carbon.
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. In the EU, where 85% of buildings are over 20 years old, there is an urgent and appealing investment opportunity to help turn brown to green.
The LOGICs fund will invest solely in the logistics sector across core Western European markets, following a value-add approach of acquiring existing assets with the intention of refurbishing and repositioning to deliver high quality assets capable of being operated at net zero carbon.
Each asset purchased will have an accelerated pathway to net zero carbon emissions through the firm’s refurbishment plans. Through the installation of solar panels, occupiers will also have the opportunity to generate and deliver their own source of green energy.
The LOGICs Fund successfully raised €200 million during its first close, supporting an accelerated energy transition in the real estate sector. A second close in expected later this year.
Rest Super ups impact investment
Seeking to further diversify both its industrial property and impact investment allocations, Rest Super signed on as a cornerstone investor in the LOGICs Fund, committing €80 million to the Fund at first close, with the intention of committing a further €120 million over subsequent closes.
As one of Australia’s largest profit-to-member superannuation funds, Rest’s decision to further invest in impact opportunities is significant for the wider superannuation sector.
The commitment brings Rest closer to its goal of having 1% of FUM allocated to impact opportunities by 2026, which it has previously looked for in listed and private equities and agricultural assets.
One percent might not sound like a lot, but as Rest Deputy Chief Investment Officer Simon Esposito saud last year, “to put it in context, by 2026 Rest is projected to be around a $100 billion fund, which would imply a billion Australia dollars in impact opportunities.”
Commenting on its new investment, Rest Chief Investment Officer Andrew Lill said: “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.
Second close anticipated later this year
Fidelity Co-Chief Investment Officer Andrew McCaffery said: “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 €550 million 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 time frame.”
Also interesting was this podcast from Fidelity looking at investable opportunities for impact investors in property: