Northern European group Brunswick Real Estate has announced the launch of its third senior debt fund Brunswick Real Estate Capital III (BREC III) with SEK 12 bn (€1.2 bn) in commitments from investors.
Investors in the fund so far are two existing clients of Brunswick which also invested in previous funds and namely Norway’s largest life insurer Kommunal Landspensjonskasse (KLP) and Swedish insurance and pension savings company Folksam Group. The vehicle is expected to broaden its investor base to around eight clients in the future.
The new fund will focus on lending to Swedish commercial property with clear sustainability goals and with maturities of up to 10 years. It will be unleveraged, like Brunswick’s previous funds. A formal first close is expected during the autumn.
‘We are very proud of the continued confidence shown by our investors, especially given the current circumstances in the market in the wake of Covid-19,’ said Pontus Sundin, CEO of Brunswick Real Estate Capital.
Sundin, formerly Helaba's Stockholm office head, was hired in mid-2019 to strengthen Brunswick’s debt business, which last year held the final close of its second senior debt fund in the Nordics. Fund II raised total equity commitments of over SEK 6.6 bn (€640 mln) from some of the region’s largest institutions. At the time, Brunswick Real Estate Capital, the credit arm of Brunswick Real Estate, said the vehicle was 'by far the largest Nordic fund focused on real estate senior debt'.
With €1.2 bn of initial equity commitments, double the size of the previous fund, Brunswick’s Fund III represents a major achievement for the group.
‘Our business model of senior secured and long-term financing is becoming more important for the property sector as an alternative to traditional bank loans and bonds with shorter maturities,’ added Sundin.
Compared to the previous two funds, Fund III will have a clearer focus on sustainability, he added. ‘We are committed to ensuring our investors contribute to a measurably positive change. In addition to green issues such as reduced carbon dioxide emissions and smarter energy consumption, we also want to ensure that our investments lead to an improvement in aspects of social sustainability.’
Commenting on the fund launch, Aage Schaanning, executive vice president and chief financial officer at KLP, a major contributor to the vehicle, said: ‘As Norway’s largest pension company with high focus on environment and responsible investment, KLP is pleased to see that Brunswick’s third senior debt fund will have increased attention to environmental aspects of buildings through its green framework. We particularly welcome the focus on providing incentives that may increase the environmental performance of existing buildings. We look forward to continuing our collaboration with Brunswick and are eager to see where their green journey will take them further in the future.’
