Swedish ICMIF member Folksam has announced a SEK 10 billion (USD 1.1 billion) investment in the real estate credit fund Brunswick Real Estate Capital III (BREC III). This is Folksam’s single largest investment ever. The fund will focus on commercial properties with clear sustainability goals.
Through a strong institutional capital base, with investors such as Folksam and KLP, the fund can offer real estate loans with maturities of up to ten years. A formal first closure of the fund is expected in the autumn. With this investment Folksam is diversifying its asset portfolio by increasing its exposure to loans with sustainable real estate investments as the underlying asset.
Brunswick Real Estate has secured investor commitments of SEK 12 billion.
Speaking about the investment, Ylva Wessén (pictured), President and CEO of the Folksam Group said: “This historically large investment is an excellent example of how we can complement our investments in interest-bearing assets, shares and real estate. This is an area with good growth and the investment gives us an attractive return at low risk.” Ylva is also a member of the ICMIF Board of Directors.
“The investment is part of our ambition to give our customers as good a risk-adjusted return as possible. BREC III is a well-established fund that provides secured loans for property financing. They also have good ambitions in their sustainability work and work continuously to raise the level. For example, a framework for green loans has been developed,” said Michael Kjeller, Deputy CEO and Head of Asset Management and Sustainability at Folksam.
In a press release, Folksam said that the company has good experience from BREC II, which is a similar real estate credit fund in which Folksam has invested a total of SEK 3 billion since 2016. Brunswick Real Estate is one of the Nordic region’s leading investors in the Nordic real estate market, with an offering that includes asset management through real estate investments and credit financing.
Pontus Sundin, CEO of Brunswick Real Estate Capital said: “We work actively to ensure that our borrowers contribute to a measurable positive change. In addition to the green issues such as reduced carbon dioxide emissions and smarter energy use, we also want to ensure that every investment leads to improvements in social sustainability aspects.”
In May of this year, Folksam announced that it had invested SEK 2.5 billion (USD 260 million) in a green bond issued by Kommuninvest. This brought the total amount invested in Green Bonds by Folksam Group to SEK 30 billion (USD 3.1 billion), making it one of the leading insurers in terms of green bond investments.
In March, Folksam invested SEK 700 million (USD 70 million) in a social bond issued by the International Finance Corporation (IFC), part of the World Bank Group, to provide financial support to companies affected by the Covid-19 pandemic; and in April, it invested a further SEK 900 million (USD 90 million) in a bond issued by the Nordic Investment Bank and SEK 100 million (USD 10 million) in a bond issued by the European Investment Bank (EIB).