Pareto Alternative Investments AS (“PAI”) has successfully completed the first closing for a new strategy for providing sustainability linked financing to Nordic real estate
Pareto Real Estate Credit Fund (“PREC”) will target first lien commercial real estate financing opportunities across the Nordics (ex. Iceland) where borrowers are incentivised to improve the sustainability profile of the property and by doing so reduce risk on the investment and promote a more sustainable environment. PAI has raised a substantial amount of capital to PREC in the first closing from leading institutional investors.
Morten Edvardsen, Head of Credit Investments at PAI commented: “We continue to see a large gap in the financing market for Nordic real estate which we believe represents an attractive opportunity for institutional capital to pick up risk premiums well above what the public investment grade market offers. For borrowers, the traditional bank market may not always offer the best terms, or be available at all, while the high yield debt market may often not be a good fit for non-recourse first lien commercial real estate financing. This leaves a large and diverse set of attractive investment opportunities for alternative lenders such as PAI. We have already established a pipeline of potential investment opportunities and expect to execute the first investment within 2020”.
PREC is PAI`s fourth collective investment vehicle for real asset debt and the third vehicle for first lien commercial real estate debt financing. PREC is however the first investment mandate with a clear sustainability linked profile.
“While PREC has an opportunistic investment mandate in many regards, we strongly believe in incentivising borrowers to improve the sustainability profile of the property. There is ample capacity for financing in both bank and bond markets for what is already classified as “green” assets. PAI, however, believe there is significant potential and a low hanging fruit in reducing carbon emissions on existing properties, often with limited amount of capex required. From a sustainability viewpoint, reducing carbon emissions from existing buildings is in many ways more important than replacing them with new buildings. We try to work closely with our counterparties to identify meaningful and clear objectives to reduce carbon emissions and improve the sustainability profile. Our experience is that property owners also recognise the value of property sustainability improvements as it attracts tenants, reduces energy costs, raises the value of the property and promotes the environment”, Edvardsen continued.
Johan Anker-Rasch, Managing Director at PAI also commented: “While PAI has been an active lender to commercial real estate for some years now and already has an established portfolio of more than NOK 10bn of such investments, PREC represents a new and important milestone. We are proud and grateful for the continued trust from our institutional investor base. We are now expanding our investment universe to cover the Nordic market as we see the benefit of being able to source a more diversified deal flow. This also reflects PAI`s ambition to market PREC towards international investors. With PREC we can offer our investors a return profile which almost matches what you expect to see in the high yield market, but with first lien security in real estate and a clear sustainability link. In the current low interest rate environment, we believe this strategy will be attractive for our investors as the hunt for superior risk-adjusted return continues”.
Advokatfirmaet Thommessen has acted as legal adviser to PAI in connection with the establishment of PREC.
For further information contact:
Morten Edvardsen
e: morten.edvardsen@pareto.no
t: +47 920 20 611
Johan Anker-Rasch
e: johan.anker-rasch@pareto.no
t:+47 934 04 491
About Pareto Real Estate Credit Fund
Pareto Real Estate Credit Fund IS is an unincorporated co-proprietorship organized in the form of a limited partnership governed by the laws of Norway which has obtained a marketing license towards professional investors from the Financial Supervisory Authority of Norway.
About Pareto Alternative Investments AS
Pareto Alternative Investments AS is the portfolio manager of Pareto Real Estate Credit Fund and an Alternative Investment Fund Manager under supervision by the Financial Supervisory Authority of Norway. PAI is 100% owned by Pareto AS, the parent company of the Pareto group. Pareto Alternative Investments AS has around NOK 22bn of AuM and focuses on direct investments in real estate and credit on behalf of primarily institutional investors. Pareto Alternative Investments AS has offices in Oslo and Stockholm. www.paretoai.no
About the Pareto group
Pareto is a leading, independent operator in the Nordic market for financial services. The companies of the Pareto group are located in 17 different cities in ten countries. The group offers a wide range of services. www.pareto.no
Tags: