Decarbonizing Portfolio Supports the Achievement of Returns
Achieving the Paris Agreement targets demands a profound transformation of global financial flows. This shift offers significant opportunities for the private sector, particularly investment funds. Investment in climate-aligned projects not only enhances sustainability but also opens avenues for long-term, resilient returns. At the OECD’s annual Forum on Green Finance and Investment, Frederic Samama, Head of Strategic Development at S&P Global Sustainable 1, highlighted a key opportunity for investors. He emphasized the benefit of aligning investment portfolios’ annual carbon footprint with the Intergovernmental Panel on Climate Change (IPCC) recommendations. Specifically, the IPCC Special Report on Global Warming of 1.5°C outlines the expected annual emission reduction rate below which investment portfolios should stay by 2050. Financial institutions can adopt this annual decarbonization rate to protect their investments against financial risks from global transition policies. The analysis of the ARETE Group shows that to increase the value of the investment portfolio, the portfolio can be aligned with the expected level of decarbonization. The real estate managed by ARETE INDUSTRIAL FUND, therefore, undergoes an internationally recognized assessment Carbon Risk Real Estate Monitor (CRREM). Using this CRREM tool, we can quantitatively assess the level of alignment of the ARETE INDUSTRIAL portfolio with the Paris Agreement and IPCC’s special report. Consequently, we are able to better and faster mitigate the transitional risks and protect our investments from the costs caused by the implementation of market schemes such as the Emissions Trading System (EU ETS II). Additionally, the CRREM tool further informs our evidence-based management of our sustainable real estate portfolio. Otherwise, the valuation of our portfolio is increased through the prestigious BREEAM certification at Very Good level, which we manage on over 90 % of our assets. Together, the two science-based assessments help to improve the risk-return profile, guide decision-making and contribute to positioning ARETE among leaders in the industrial real estate industry in the CEE region.
Industrial real estate: an opportunity for long-term investment in a period of market stabilization
Slovak magazine Trend published an article by Lubor Svoboda, co-founder of the investment and real-estate group ARETE. In the article, Lubor discusses the current situation on the financial and real estate markets. The current investment market represents an opportunity for those looking for profitable investments in industrial real estate. Commercial real estate prices in Western markets have seen a significant correction, creating an opportune time to buy. Industrial parks with quality management provide stable income through long-term leases, making them an ideal choice for long-term investment. Now is a good time to invest prudently to achieve long-term appreciation. Lubor Svoboda also outlines the strategy of the ARETE INDUSTRIAL fund, which is preparing for further acquisitions of industrial parks in Western and Central Europe to its portfolio. Read the full article in the Trend magazine or here: Priemyselné nehnuteľnosti: príležitosť na dlhodobé (trend.sk)
We Participated in a Charity Event to Help Animals in Need
On Sunday, September 22, the 11th annual charity event “Let’s Run and Help Shelters” took place in Stromovka, Prague, which we supported. The event is organized by the namesake organization, which has been supporting shelters that help animals in need since 2014. Over its years of operation, the organization has managed to raise and distribute over 20 million CZK in financial aid. The group’s ambition is to create a society where helping animals is a given. Notably, 96% of the assistance to shelters comes from individual donors, with only 4% from companies. We are pleased to have contributed to this good cause and enjoyed the wonderful atmosphere of the day. Striving for a society responsible for the environment is also part of our ESG strategy. For instance, within the ARETE INDUSTRIAL real estate fund, we manage more than 80% of buildings under the international BREEAM sustainability certification, which allows us to increase the value of our properties while reducing our environmental impact.
The Time for Real Estate Investment Reallocation Has Come
Lubor Svoboda, co-founder of the investment and real estate group Arete, provides an overview of the latest trends in the real estate market in the article for Euro magazine. He explains how the COVID-19 pandemic and subsequent geopolitical instability have impacted the globalization of manufacturing processes and the European real estate market. Lubor Svoboda discusses recent price corrections in developed real estate markets and the revival of investment activity in Europe after two years of decline. He also highlights opportunities for investors in select real estate segments and outlines the strategy of the ARETE INDUSTRIAL fund, which is preparing for further acquisitions of industrial parks in Western and Central Europe. The full article can be found in Euro magazine, published on September 30, or available here.
ARETE Enters the Polish Market
We have completed the acquisition of a major logistics park in western Poland. With this move, ARETE expands its operations beyond the Czech Republic and Slovakia, entering the Polish market. This acquisition strengthens the portfolio of the ARETE INDUSTRIAL fund, increasing its total leasable area by 25% and raising the value of assets under management to over EUR 300 million. In this significant move, which is in line with the group’s strategy of investing in high-quality logistics assets in strategic locations in Europe, ARETE is expanding into the Polish market. The park will be part of the ARETE INDUSTRIAL real estate fund portfolio. The park is located in the city of Zgorzelec and represents a Class A logistics facility with a BREEAM Excellent certification, offering a total leasable area of approximately 65,000 m2. Its key location on the Polish-German border provides direct access to major European markets. The park is fully leased on a long-term basis to the prestigious tenants, including a European manufacturer of disinfectants and hygiene products and a leading logistics operator running a distribution center. The city of Zgorzelec offers numerous advantages for logistics and industrial operations. Its strategic cross-border location provides seamless access to both the German and Polish markets, with excellent connections to major highways, including the A4, which is part of the European Transport Corridor III. This ensures efficient transport to major cities like Dresden, Berlin, and Wrocław. The region also offers access to a skilled workforce from both Poland and Germany and serves as an industrial hub focused on manufacturing, retail, and services. With the acquisition of this park the total leasable area of the ARETE INDUSTRIAL fund will increase by 25%, and the value of assets under management will exceed EUR 300 million. Geographically, the leasable area of the fund is now distributed as follows: 48% in the Czech Republic, 27% in Slovakia, and 25% in Poland. The park combines high functionality with environmentally friendly solutions. The BREEAM Excellent certification confirms its high energy efficiency and low carbon emissions. The facility is equipped with advanced energy management systems, LED lighting, and systems to limit water usage, meeting the needs of tenants seeking both sustainable and modern logistics spaces. The project is thus fully in line with ARETE Group’s ESG strategy and confirms its commitment to sustainability and modern infrastructure. This acquisition represents another key step in our expansion strategy in Europe and offers significant growth potential.
Advantages and Specifics of Qualified Investor Funds
Qualified Investor Funds (QIFs) deliver higher long-term returns compared to mutual funds. The ARETE INDUSTRIAL fund consistently ranks among the most stable and best-performing investment funds in the Czech Republic. In an article for Wealth Magazine, Lubor Svoboda, co-founder of the investment and real estate group Arete, explains what it takes to establish a QIF, the benefits these funds offer compared to retail funds, and the specifics of a QIF investing in industrial real estate within a closed investment cycle. He also discusses the challenges the ARETE INDUSTRIAL fund has faced in recent years and reveals the group’s plans for the fund in the coming years. With real estate having undergone price corrections and inflation stabilizing, Arete is poised for further strategic acquisitions in the CEE region and Western Europe, supported by favorable market conditions, low leverage in the fund’s financing, and strong bank confidence. You can find the full article in the latest issue of Wealth Magazine or here.
Frog castle made of trees: increasing the value of ARETE Park Valašské Meziříčí with BREEAM
We sustainably increase the value of the ARETE Park in Valašské Meziříčí by developing the property with respect to tenants, investors and the environment. Under professional supervision and based on the BREEAM scientific method, we built a wooden “frog castle” for amphibians. The amphibians hide in it to escape the increasing heat and drought. By promoting biodiversity, we consistently meet international conventions, European directives and our voluntary commitments, and thus increase the value of the Valašské Meziříčí site for all stakeholders at minimal cost. With temperatures rising twice as fast as the global average in the Czech Republic, many living things are seeking shelter from heatwaves and droughts. Among them are the frogs that have taken up residence in the ARETE Park Valašské Meziříčí. Therefore, in accordance with the internationally recognized Building Research Establishment Environmental Assessment Method (BREEAM) and under the guidance of authorized landscape architects, we decided to build a home for amphibians, or “frog castle”, out of wooden logs in the ARETE industrial area. By doing so, we are supporting the diversity of animals found in our industrial parks, fulfilling our commitment to promoting biodiversity and working to protect animal species and their habitats. Although this is a gentle and low-cost solution, it contributes significantly to the long-term value of the property for all parties involved. The “frog castle” offers amphibians in the ARETE area a home in the shade, by the water and in hiding from possible predators. The side wall of the “frog castle” consists of logs, the filling is provided by smaller twigs. Frogs in the wild often use logs or tree stumps or rocks for shelter. These are all elements of the “frog castle”, which is 1 meter high and has an area of 2 x 1.2 meters. The refuge is connected to the water surface by pebbles and parts of cumin seeds. During the winter, it will provide a home for amphibians where they can safely hibernate. According to data from international real estate consultancy JLL (Jones Lang LaSalle), comprehensive and sustainable development of buildings using BREEAM increases the capital value of a property by an average of 20.6%. The value is based on analysis of 600 transactions in London between 2017 and 2021. Sustainability certification not only demonstrably adds value, but also reduces the financial risks associated with increasingly stringent energy and environmental regulation. Structures such as the ‘frog castle’ help meet EU habitats directives or the EU’s strategic diversity targets for 2030.
Now is the Time for Strategic Real Estate Investments in Europe
Lubor Svoboda, co-founder of the investment and real estate group Arete, explains in an article for Forbes magazine how macroeconomic indicators and the situation on the financial markets have changed. The commercial real estate market has undergone a significant correction, presenting a unique opportunity for forward-thinking and informed investors. Central banks are predicting a more optimistic future, and price stability is gaining strength. Arete Group is prepared to capitalize on these conditions As inflation stabilizes and interest rates decrease, the industrial real estate sector offers stability and long-term value. Well-managed income-generating industrial parks, like those in Arete’s portfolio, provide steady income through long-term lease agreements, making them an attractive choice for investors seeking reliable returns. Arete Group continues to expand our industrial portfolio through targeted and highly attractive acquisitions across Western and Central Europe. As the market recovers, now is the right time to make strategic and forward-looking investments that capitalize on these recent price corrections. Read the full article in the September issue of Forbes magazine or here.
For the sixth time, we participated in the Good Will Run
On Tuesday, September 10, 2024, the 6th annual Good Will Run charity race organized by The Committee of Good Will – Olga Havel Foundation took place. Some of our colleagues from Arete participated in the company relay, running 4×2.5 km. This was our sixth year in the race. All proceeds from the event will be donated by the foundation to support families in need. We are always happy to contribute to a good cause, and we plan to continue supporting the foundation in the future. The Committee of Good Will – Olga Havel Foundation, over its more than three decades of existence, has helped numerous individuals and has distributed hundreds of millions of crowns to nonprofit organizations for charitable purposes. We thank our colleagues for participating and look forward to next year’s race!
ARETE Investment Group’s Ten-Year Anniversary
This year, ARETE Investment Group celebrates a decade of success in the market. Over the past ten years, the group has achieved significant milestones, establishing itself as a pioneer in closed-end real estate funds in the Czech Republic. ARETE is the only investment group in the country to have successfully closed two real estate funds and fully paid out its investors. In 2014, Robert Ides and Lubor Svoboda founded ARETE with a vision to elevate the investment landscape in the Czech Republic. The group quickly attracted its first investors from Singapore, laying the foundation for its growth. Initial investments were directed towards residential buildings, which were later sold at a profit. As the team expanded, so did the number of experts and investors. The first fund, ARETE INVEST CEE, was focused on a residential portfolio and closed its investment cycle with a gross return of 39% per annum. This success was followed by the second fund, ARETE INVEST CEE II, which focused on industrial real estate and achieved an average gross return of 11% per annum. ARETE has become synonymous with successful investments and professional fund management. The group’s current activities continue with the new ARETE INDUSTRIAL fund, which focuses on industrial real estate with the goal of quadrupling the assets under management. The fund currently manages assets worth over 230 million euros, with a target volume of 500 million euros. Its portfolio includes 11 parks with 18 high-quality tenants, providing 201,000 m² of leasable space and space under construction. ARETE INDUSTRIAL has also become one of the first “light green” funds in the Czech Republic under the European SFDR regulation, aligned with the group’s ESG strategy. ARETE’s logistics and industrial parks are built to high technological and environmental standards. Looking ahead, ARETE has ambitious plans. In addition to continuing to grow the portfolio and value of its third fund, the group plans to expand its activities into new funds and investments in energy transition. ARETE also plans to further extend its investments into Central and Western Europe, thereby strengthening its market position.
