Cromwell Property Group and sustainable real asset manager Dasos Capital have formed a partnership to establish a wooden building property fund.
The open-ended fund will target an initial first close of €100 million committed equity by the end of calendar year 2021, with a target portfolio value exceeding €1 billion over the longer term.
Cromwell will contribute its real estate investment, fund, asset, project and development management experience to the joint venture and Dasos the timber, land, sustainability and wooden building expertise.
The fund, whose scope is Pan-European, aims to harness the growing appetite among institutional investors for opportunities that meet their ESG criteria and align with the European Union’s Sustainable Finance Disclosure Regulation
“We intend to establish a truly sustainable pan-European fund that’s the first of its kind as a unique offering to investors,” said Cromwell’s managing director, Europe, Pertti Vanhanen.
“An investment in wooden buildings matches the objectives of institutional and other advanced real estate investors who are serious about carbon neutrality and minimising the impact of climate change on our world.”
Cromwell explained that storing atmospheric carbon sequestrated by forests into wooden buildings leads to substantial carbon savings compared to normal steel and concrete-intensive building practices.
“It also helps to address the property industry’s growing climate change challenge, with the world’s building stock expected to double by 2050 and buildings and construction already accounting for 39% of global greenhouse gas emissions in 2019,” the firm said in a statement.
Dasos CEO Olli Haltia said, “Based on our ongoing market research, we estimate there to be an 8% annual growth within the European market for wooden building projects since 2015. This growth is set to continue in line with the market and new regulations strongly supporting the usage of wood, massive timber and other recyclable materials in new real estate projects.”
He said that the Nordics is leading the way but France has plans to implement legislation to ensure that all new public buildings are constructed with a minimum of 50% wood or other sustainable materials by 2022.
He said that the ability to offer the benefits of wooden building technology to a more diverse group of international investors is driven by advances and breakthroughs in engineered wood products (EWP) such as cross-laminated timber, laminated veneer lumber and glulam.
Haltia added that Dasos has strengthened its in-house knowledge and capability in co-operation with Stora Enso, one of the global leaders in wood-based construction and a specialist in the manufacturing of engineered wood products.