Cromwell Property Group, the Australia-headquartered firm, has given details of a new fund hitherto kept under wraps since new Europe head Pertti Vanhanen took the helm earlier this year.
Cromwell is partnering with sustainable real asset manager Dasos Capital to establish a pan-European, open-ended wooden building property fund that aims to assemble a €1 bn portfolio.
An initial target of €100 mln is being targeted for a first close by the end of 2021, as the company explained it was looking to harness increasing institutional investor appetite for opportunities that meet responsible investment and environmental, social and governance (ESG) criteria and align with the European Union’s Sustainable Finance Disclosure Regulation (SFDR), which integrates sustainability risk considerations into investment decision-making processes.
‘We intend to establish a truly sustainable pan-European fund that’s the first of its kind as a unique offering to investors,’ said Vanhanen, Cromwell’s MD in Europe.
‘An investment in wooden buildings matches the objectives of institutional and other advanced real estate investors who are serious about carbon neutrality and minimising the impact of climate change on our world. This is an exciting opportunity, and we are delighted to be able to partner with Dasos’ highly regarded sustainable timber and biodiversity investment experts.’
The €1 bn wooden building fund is just one of a number of products the company is pursuing. In an interview with PropertyEU published in June, Vanhanen disclosed the board of Cromwell had passed a European 2025 Strategy into Action plan whose five objectives are to build up investment management, raise brand awareness, launch new products including winning more separate account mandates, leveraging its advanced IT systems, and becoming more efficient.
It is already known to be working on a core-plus logistics fund into which Cromwell will contribute up to €40 mln of coinvestment capital.
Explaining more of their wooden building fund, Cromwell and Dasos said storing atmospheric carbon sequestrated by forests into wooden buildings leads to substantial carbon savings compared to normal steel and concrete intensive building practices.
It also helps to address the property industry’s growing climate change challenge, with the world’s building stock expected to double by 2050 and buildings and construction already accounting for 39 per cent of global greenhouse gas emissions in 2019.
Olli Haltia, Dasos CEO, said: ‘We have been advising pension funds, family offices and other investors on investing in real assets including timber, land and natural capital opportunities for over 15 years.'
He added, ‘Based on our ongoing market research, we estimate there to be an 8% annual growth within the European market for wooden building projects since 2015.
'This growth is set to continue in line with the market and new regulations strongly supporting the usage of wood, massive timber and other recyclable materials in new real estate projects. It is wonderful to see the Nordics leading the way, along with other countries such as France which has plans to implement legislation to enforce all new public buildings to be constructed with a minimum of 50% wooden or other sustainable materials by 2022.'
The CEO further explained: ‘Our ability to offer, in partnership with Cromwell, the benefits of wooden building technology to a more diverse group of international investors is driven by advances and breakthroughs in engineered wood products (EWP) such as cross laminated timber, laminated veneer lumber and glulam. We have also strengthened our in-house knowledge and capability in co-operation with Stora Enso, one of the global leaders in wood-based construction and a specialist in the manufacturing of EWP.’
Cromwell will contribute its real estate investment, fund, asset, project and development management experience to the JV.