The Investa Commercial Property Fund (ICPF) has become the latest fund manager in Australia to attract investment from the government’s green funding agency.
Clean Energy Finance Corporation (CEFC) has given the unlisted fund AUD110m (€76.8m).
ICPF joins other managers, including EG Funds Management, that have won investment from the agency, which was set up in 2013 to foster and promote decarbonisation of the Australian economy.
Rory Lonergan, CEFC Investment Fund lead, told IPE Real Estate that CEFC seeks to achieve two objectives with the ICPF investment.
“We have invested with a fund manager who is a leader in the energy efficiency sector relating to A grade and premium buildings,” he said.
“We also enter into an agreement with ICPF to ensure that it shares the cutting edge technologies it has developed with the broader property industry.”
ICPF will work with CEFC to achieve net-zero carbon emissions and will support other property owners and companies with similar ambitious.
Part of CEFC’s investment will go towards construction of the latest ICPF office project, 60 Martin Place, in Sydney’s central business district.
“The importance of establishing these initiatives is to help accelerate the adoption of integrated energy efficiency and renewable energy technologies and to support Australia’s transition to a clean energy economy,” he said.
“We invest in fund managers so that we can influence how they think about the whole portfolio from an energy perspective,” he said, adding that the government also expects a return from its investments.
“We have accelerated our focus on the property sector with increased equity participation over the past 18 months, and we continue to actively look at what levers we can pull to influence people’s behaviour.
“It so happens that in this sector we can deploy some money by way of investment to catalyse the change in behaviour.”
Lonergan said CEFC looks to focus on different segments of the market, citing the example of its AUD125m investment in EG Funds Management, a specialist in core-plus real estate.
The equity is being used to seed EG Funds’ High Income Sustainable Office Trust, which targets a AUD400m portfolio.
Longergan said EG Funds has a specific strategy around energy efficiency of buildings and wants to drive economic benefits from it.
“The key of our investment is that we want to bring other investors along on this journey so that they will become a believer in the energy efficiency story and they understand the economic benefits.”
EG Funds has since brought in a new investor – United Financial Services, an arm of the Uniting Church in Australia – to invest AUD25m in the office trust.
Lonergan said CEFC provided AUD68m to the unlisted property fund manager, Quintessential Equity, to build an AUD120m commercial office tower with 5.5 star standard Nabers energy rating in Geelong, Victoria.
Apart from office buildings, CEFC also invests in retail and industrial assets, which, he said, form significant part of the property sector.
The central reason for its investments is to increase the flow of finance into renewable energy, energy efficiency and low emissions technologies.
From July 2013, the Australian government is allocating AUD2bn a year to build up an AUD10bn fund over five years.
At the end of 30 June, it had deployed AUD2.3bn in projects with a total value of AUD5.7bn.