KLP invests in Catella’s ‘dark green’ European residential fund

Norway’s KLP has backed Catella Residential Investment Management’s (CRIM) open-ended pan-European fund.

CRIM said the Catella European Residential III (CER III) fund has raised over €270m from the NOK871bn (€86.5bn) municipal pension provider and a group of eight German pension funds and insurers.

The additional capital raised lifts CER III’s total equity to €750m since its initial launch two years ago. As previously reported, German doctors’ pension scheme Nordrheinische Ärzteversorgung and two other local pension funds have also backed CER III).

Earlier this year, CER III was reclassified as an Article 9 dark green impact fund under the taxonomy of the EU’s sustainable finance disclosure regulation (SFDR). The new status means the fund pursues sustainable societal objectives, or the reduction of carbon emissions, in its investments, the manager said.

The manager said the capital raise follows CER III’s transition from a light green real estate fund to the ”certified status of the first pan-European dark green” residential property impact fund.

Andreas L Farberg, investment manager of global real estate at KLP, said: “We select our management partners and investments in real estate, and all other asset classes, on the principle that they contribute to the achievement of globally adopted goals for a sustainable future.”

Farberg said the EU SFDR dark green investment overlay of CER III is aligned with KLP’s ambitions for sustainable investments.

“In particular, we appreciate that Catella has created a direct link between their fee income as an asset manager and the achievement of the fund’s specified sustainability targets, which contributed to our selection of CER III.”

Michael Fink, CRIM’s managing director, said black swan events, such as the global financial crisis or the Covid 19 pandemic, have a significant impact on housing markets.

“The same random pattern of severe market disruptions will almost certainly occur more frequently in the future with an oncoming tsunami of cataclysmic events related to climate change. Prevailing market wisdom dictates that rental income should be maximised, but we have demonstrated that a lack of social justice, or real affordable rents in a portfolio, are a major source of risk.

“Now with our impact fund, we are adding the third ESG pillar of our investment philosophy by incorporating Taleb’s ‘skin in the game’ thesis through a close alignment of investor and investment manager interests, or the governance ‘G-factor,’ in CER III’s fee structure.”

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