SG Capital Partners has opened a fund worth €80M to buy Baltic sustainable commercial real estate. The Fund focuses on cash flow generating office and retail assets in Vilnius, Riga and Tallinn that have either achieved high sustainability (eg. Breeam) ratings or have the potential to do so.
Harijs Švarcs, CEO of SG Capital Partners says: “We see increasing interest from top international and local tenants in sustainable buildings in our region and strongly believe that in 5 to 10 years it would be increasingly difficult to be in the business without providing particular focus to the aspects of sustainability. Today, investment sustainability is an active approach to add value to our investments. In the same way as electric cars and electric charging stations are transforming the landscape of major European cities, so will sustainable buildings”.
The fund is planned to be expanded to a leveraged size of €200M, with an 8-years term, extendable for 2 additional years. The Fund was backed by SEB and Swedbank pension funds, INVL Latvia pension fund and largest private bank in the Baltics – ABLV Bank, AS. Fund first close equity commitments are €41M. The Fund will hold subsequent closes during 2017/2018.
Janis Rozenfelds, CEO of SEB pension funds in Latvia says: “Baltic commercial real estate offers attractive investment opportunities at a significant premium versus other Eurozone markets. The team has strong investment experience and Fund’s focus on sustainability goes well together with pension plan participants’ long-term interests and our own corporate values”.
Andris Kovalčuks, CEO of New Hanza Capital, AS says: “The launch of an investment fund focused on sustainable buildings is a significant milestone in development of Baltic capital markets. It is even more important that this is funded by the strongest local institutions. This is a clear sign that Latvia is in step with the global trends in investment management.”
SG Capital Partners Fund I is the first sustainable commercial real estate fund in the Baltics. Hadley Barrett, the Fund’s sustainability adviser, real estate and energy developer and accredited BREEAM/LEED auditor, explained: “Sustainable buildings reduce energy consumption, consume less resources, have lower operating costs and better return on investment and provide a more healthy internal environment - boosting tenant productivity. Environmental accreditation, such as Breeam or the Green Building Council ‘LifeCycle Standard’ are important not only for tenants but also major investors. In the Baltics, sustainable certification is here to stay”.
After joining Eurozone, the Baltic region’s growth rates have been above Eurozone averages. Above average GDP growth, low public debt levels and interest rates, have led many investors to include Baltics in the wider Nordic region in their portfolios.
SG Capital Partners AIFP is Baltic commercial real estate investment manager with a focus on investment sustainability. Established in 2016, it is owned by the founding partners (70%) and ABLV Group’s company New Hanza Capital, AS (30%). SG Capital Partners AIFP is registered as Alternative Investment Manager and is supervised by Latvian Financial and Capital Markets Commission.