EfTEN Baltics Sustainable Property Fund

Location:

Regional

Project number:

50770

Business sector:

Property and tourism

Notice type:

Private

Environmental category:

FI

Target board date:

25 Apr 2019

Status:

Signed

PSD disclosed:

25 Mar 2019

Translated versions of this PSD: Estonian | Latvian | Lithuanian

Project Description

Provision of an equity investment of up to EUR 30 million in favour of Usaldusfond EfTEN Real Estate Fund 4 (the "Fund"), a closed-end investment fund incorporated in Estonia. This would be the first green property fund in the Baltics with climate agenda and green objectives as an integral part of the business concept.

Project Objectives

The Fund's objective is to invest in high quality cash flow generating real estate assets across Estonia, Latvia and Lithuania (the "Region"). The Fund will invest primarily in the office, retail and logistics sectors mainly in the capitals and secondary cities of the Region. The Fund will become the first fund in the Region to integrate ambitious climate objectives and a focus on building sustainability alongside a commercial rationale. The Fund will also be the first in the Region to join the Global Real Estate Sustainability Benchmark ("GRESB"), an organization committed to assessing economic, social and corporate governance ("ESG") performance of real estate assets globally.

Transition Impact

The transition impact of the proposed project will come in particular from the following areas:

  • Green: EfTEN Baltics Sustainable Property Fund will be the first locally managed private equity real estate fund in the EBRD region with a green agenda, seeking commercial uplift through the implementation of mandatory sustainability measures. This strategy includes upgrade of physical assets infrastructure applying state-of-art techniques, introduction of professional resource efficient management services, engagement with asset occupants through green leases and reporting on sustainability using applicable international standards. Enhanced reporting of the sustainability performance of the Fund will support the replicability of the project and ultimately the development of Green-focused property funds as an asset class in the Region.
     
  • Resilient: The Bank's investment will support further strengthening of the Real Estate funds industry in the Baltics.

Client Information

USALDUSFOND EFTEN REAL ESTATE FUND 4

Usaldusfond EfTEN Real Estate Fund 4 is closed-end private real estate equity fund established in the form of a limited partnership incorporated in Estonia and fully controlled by EfTEN Neljas GP ("General Partner").

EBRD Finance Summary

EUR 30,000,000.00

Total Project Cost

EUR 126,000,000.00

Environmental and Social Summary

Categorised FI under the 2014 ESP. Environmental and Social risks associated with the property fund investing primarily in existing buildings in the Baltic Countries are readily addressed through formal risk management procedures. Environmental and Social Due Diligence (ESDD) was carried out based on the review of the completed ESDD Questionnaire by the client and follow up communication. The ESDD showed that the Fund currently does not have formal environmental and social risk management procedures for its investment activities. The Fund, therefore, is required to adopt the Bank's ES Risk Management Procedures for Equity Investment. The Fund will also adopt the Bank's green investment criteria. The Fund will be required to comply with PR2, PR4 and PR9 for all across of its investments as well as submit an annual environmental and social report to the Bank.

Technical Cooperation

The Bank will provide TC up to EUR 50,000 to support the implementation of all the Fund's sustainability criteria. Specifically, TC will support engagements with the tenants to prepare the green leases and also to enhance reporting on the sustainability.

Company Contact Information

Indrek Kaldoja
indrek.kaldoja@eften.ee
Page 3
+372 566 29102
www.eften.ee

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