Nordic real estate investor NREP is in the final stages of closing its latest Nordic Strategies Fund, which has raised a record-breaking €1.9 bn so far and is on course to hit the €2 bn mark.
The fund – Nordic Strategies IV – is no longer marketing and is expected to reach a final close in the next few weeks, according to a company spokesperson. If one last investor is added, it will have raised a total of €2 bn including €200 mln of discretionary co-investment capital.
Investors in the fund are mainly pension funds, both from the Nordics and abroad. They include Industriens Pension, a labour market pension scheme for around 410,000 industrial employees in Denmark, a new client of NREP. The fund was also backed by Novo Holdings, the holding company of the Novo Nordisk Foundation, one of the world’s largest charitable foundations. Novo Holdings recently became a minority owner of NREP, after having invested in the company’s funds since 2018.
The vehicle will ‘address underserved real estate segments across the Nordics, with a main focus on various forms of customer-centric residential rental properties, care homes and modern logistics’.
NREP said it has already committed more than 40% of the fund’s capital and the company’s pipeline exceeds the fund’s remaining capital. The fund was capped to match the investment opportunity and demand from investors significantly exceeded the fund’s capacity, it added.
‘We create value by making real estate better through more customer-centric and greener solutions. Our approach to real estate addresses structural needs that do not disappear with market cycles and has proven to be very resilient during the Covid-19 pandemic. We are seeing that recent market uncertainties have led to a large pool of new opportunities for us within our main segments,’ said CEO Claus Mathisen.
NREP’s main strategies seek to address needs arising from long-term structural and demographic trends, such as urbanisation and ageing populations. The Nordic capitals are among the fastest growing in Europe and accordingly face multiple challenges.
‘We analyze for relevant problems to solve with our approach. For example, the Nordic capitals lack housing solutions targeted to low- and middle income, which creates a need for smaller, more affordable rental units. Also, the age-group above 80 is increasing by more than 50% until 2030 across the Nordic countries, leading to a widespread shortage of care homes,’ added Mathisen, noting that 40% of Swedish municipalities already report an immediate lack of care homes.
Initial investments by the fund include 12 care homes, primarily in Sweden, as well as a number of innovative sustainable residential investments, like the development of 108 net zero energy apartments just outside Stockholm, as well as a large residential project with approximately 400 DGNB Gold-certified apartments in Copenhagen’s South Harbor.
In Norway, a new joint venture has been established with Oslo House to acquire and develop residential buildingss, and in Finland investments include new sites to expand the serviced living concept named ‘Noli Studios’. The fund also bought into several logistics opportunities in Finland, Norway, Denmark, and Sweden, where NREP is pioneering the largest roof-top solar system in the Nordics.
While NREP mainly invests in the living, care homes and logistics segments, the company closely monitors opportunities in other areas as well. ‘We recently got the opportunity to partner on a hotel property in downtown Stockholm, the Clarion Hotel Amaranten, which we will modernize to reduce the climate impact of the building. We are also seeing opportunities to improve the customer value proposition in the flexible office segment,’ explained Jani Nokkanen, CIO of NREP.
