UK local authority pension schemes and the Church Commissioners for England are among investors that have committed £350m (€410m) to Bridges Fund Management’s “dark green” real estate impact fund.
Bridges Property Alternatives Fund V, which has been classified as an Article 9 fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR), attracted a number of repeat investors, including Clwyd Pension Fund, East Riding Pension Fund, the Environment Agency Pension Fund, Merseyside Pension Fund and South Yorkshire Pensions Authority.
New investors include the Church Commissioners, The Dunhill Medical Trust, Enowe, Investcorp-Tages, The JW McConnell Family Foundation and Mercer Private Investment Partners VI.
Bridges said the fund was one of only a few “dark green” real estate funds, which meet Article 9 SFDR requirements by holding assets that are sustainable from the point of acquisition.
“This is only possible because Bridges is often involved from the start of the development and planning process, allowing sustainability features to be incorporated into the building design,” the company said.
Earlier this year, real estate association INREV received clarification from the European Securities and Markets Authority that to qualify for Article 9 status real estate funds would need to hold assets that were already deemed sustainable, rather than assets that would made sustainable over the life of the fund.
All new developments in the Bridges fund have to achieve an energy performance certificate (EPC) rating of B or BREEAM Very Good as a minimum.
The company has been involved in a number of net-zero carbon developments that look to limit emissions in both construction operation, using recycled materials, heat pumps, LED lighting and solar panels, for example.
The fund is the fifth in a series of vehicles that have sought to “achieve both attractive financial returns and positive social and environmental impacts”.
It was oversubscribed, closing £50m above its original target of £300m and almost 60% larger than its predecessor launched in 2017.
Bridges said a significant proportion of the new investors joined the fund specifically because of its dual focus on financial and impact performance.
The funds focus on what Bridges terms “growth locations and needs-driven sectors”, most notably in healthcare, low-carbon logistics and lower-cost and affordable housing.
Simon Ringer, head of Bridges Property Funds, said: “By concentrating on our preferred alternative and needs-driven sectors such as low-carbon logistics, healthcare and lower-cost housing, we have been able to generate consistent financial returns – typically well ahead of market benchmarks – whilst also achieving meaningful social and environmental impact.
“We have always believed that renewing our built environment is a critical part of the transition to a more sustainable and inclusive economy.”
Ringer said the new fund was “already ahead of our deployment targets”, having secured 17 transactions.
Chris West, head of timberland, infrastructure and indirect property at Church Commissioners for England, said: “The investment with Bridges enables the Church Commissioners to partner with an experienced real estate manager with a proven track record in delivering strong performance and positive social and environmental impacts within the UK.
“Our guiding investment philosophy is respect for people and planet and this ethos is shared by Bridges. This commitment, to a fund that has strong sustainability credentials, builds on our recent investments into green energy infrastructure projects across Europe and the US and is in line with our strategy as a long-term investor, with unique responsibilities, to support decarbonisation efforts and the transition to a net-zero economy.”
