Taaleri Housing Fund VIII is a closed-end residential fund established in 2021. The fund develops energy efficient and high-quality rental apartments in the Helsinki Metropolitan Area, Tampere and Turku.

The fund targets to offer an attractive return based on rental cash flow and potential value increase through built-to-rent strategy.

The fund pays attention to the energy efficiency of its assets along with other comprehensive sustainability criteria. Sustainability reporting is done extensively and according to EU's Sustainable Finance Disclosure Regulations on a yearly basis.

The fund is open to new investors.

This financial product is labelled as an Article 8 product according to EU SFDR regulation (2019/2088) and it promotes environmental or social characteristics. The “do no significant harm” principle applies only to those investments underlying the financial product that take into account the EU criteria for environmentally sustainable economic activities. The investments underlying the remaining portion of this financial product do not consider the EU criteria for environmentally sustainable economic activities.

Sustainability-related disclosures

Summary

This financial product is labeled as an Article 8 fund according to the EU SFDR regulation (2019/2088). This financial product promotes environmental and/or social characteristics but does not have the goal of making sustainable investments. The fund manager ensures that its investment activities do not cause significant harm to any sustainability goals. The fund commits to reducing its principal adverse sustainability impacts by considering and reporting Principal Adverse Impacts (PAI) indicators presented in the amending regulation (EU/2022/1288) of the SFDR, in Tables 1, 2, and 3 (2022/1288, Annex I) and reports them biannually.

The investments’ good governance and minimum social safeguard requirements are ensured by conducting comprehensive due diligence assessments that follow the recommendations of the UN Guiding Principles and the OECD’s recommendations, as well as the International Labor Organization’s eight core conventions. Sustainable investments that are aligned with the EU Taxonomy regulation (2020/852) undergo an additional assessment to ensure that the investments do not cause significant harm to the environmental objectives of the Taxonomy and that they align with the technical screening criteria as well as the criteria related to the minimum social safeguards, published in the amending regulation. These assessments cover the whole life cycle of the investments.

The investment strategy and goals are integrated into negotiations and contracts with the investment targets. The investment strategy is implemented throughout the investment process and is accompanied by careful risk management. Before making an investment, Taaleri’s sustainability-related principles and processes as well as sustainability risks, are considered when analyzing suitable investment targets and -locations, as well as the life cycle impacts of the investment targets. The fund’s goals and planned actions, which are reported regularly, are achieved through active ownership and engagement.

The attainment of promotion of environmental and social characteristics is done by monitoring, collecting, and reporting data on sustainability indicators chosen. These sustainability indicators have been defined by evaluating which quantitative and/or qualitative quantities best describe the strategy of the financial product or the characteristics of the investments in the portfolio and are reported annually as part of the fund’s periodic reporting.

The fund intends to mainly make investments that fulfill the EU SFDR (2018/2088) criteria for sustainable investments and, where possible, EU Taxonomy (2020/852) aligned investments.

The investment targets’ life-cycle emission calculations are often based on partial forecasts and use multipliers and estimates, which is why they always involve a small amount of uncertainty or inaccuracy. However, these estimates describe in enough detail the magnitude and scale of sustainability impacts and thus sufficiently describe the attainment of the investment objective and do not hamper the successful promotion of the environmental or social characteristics.

To ensure that the target companies fulfill the criteria for sustainable investments, they undergo careful ESG-, technical-, financial-, commercial-, tax, and legal -due diligence assessments. In addition, investment targets are required to commit to reporting financial information and to develop and put in place appropriate processes for managing and documenting good governance practices.

The engagement policies concerning the fund and its investment targets, aim to ensure that the fund's promoted environmental and social characteristics are realized and that the fund nor its investment targets do not cause significant harm to society nor employees, and that the activities do not violate human- or workers’ rights, nor participate in corruption and bribery.

We regularly monitor and audit our operations and those of our investment targets.

The fund has not been assigned a benchmark that describes the attainment of the environmental or social characteristics promoted by the financial product. The investment targets are encouraged to set science-based GHG-emission reduction targets and strive to achieve net zero emissions by 2050, as stated in Taaleri’s Net Zero Asset Managers Initiative.

No sustainable investment objective

This financial product promotes environmental and/or social characteristics but does not have the goal of making sustainable investments. The financial product commits to making one or more ‘sustainable investments’ as defined in the SFDR Regulation (EU) 2019/2088 and, if possible, sustainable investments as defined in the EU Taxonomy Regulation (EU) 2020/852. By ‘sustainable investment’ we refer to economic activities that align with the definition of a sustainable investment in the EU Sustainable Finance Disclosure Regulation 2019/2088, which promotes environmental and/or social characteristics, provided that the investment does not cause significant harm to any environmental or social objectives, and that the investment targets follow good governance practices.

The fund commits to reducing its principal adverse sustainability impacts and ensures that its investment activities do not cause significant harm to any sustainability goals related to the environment or society. This is ensured by monitoring and reporting the principle adverse impact indicators defined in Annex I, Table 1 of (EU) 2022/1288, as well as additional indicators relevant to the fund defined in Annex 1, Tables 2, and 3. The additional indicators have been determined using a materiality analysis. In addition, the fund monitors and reports the principal adverse impacts and actions taken, and sets goals for reducing the adverse impacts of the investment target for the next reference period. By the fund's licensed operation, these processes account for the acquisition-, construction-, and operation phases of the real estate target. Compliance with investment requirements and minimum social safeguard requirements is ensured through comprehensive due diligence reviews, which take into account the OECD's guidelines and the UN's guiding principles regarding business activities and human rights, as well as the basic principles and rights of workers as defined in the International Labor Organization's core conventions. For those investments that comply with the EU Taxonomy Regulation (EU) 2020/852, it is ensured that the investments do not cause significant harm to the environmental objectives, by taking into account the technical screening criteria of the amending regulation, the entire life cycle of the investment and the criteria of minimum social safeguards.

Environmental or social characteristics of the financial product

This financial product promotes environmental and/or social characteristics.

Promoted environmental characteristics are:

  • Green transition is supported by emphasizing the proximity of public transport connections when selecting investment targets. Also, electric car charging stations and functioning bicycle storage facilities are built on-site.
  • Investment targets are designed to enhance the efficiency of recycling and reduce the amount of waste produced.
  • Energy efficiency and carbon footprint are considered as part of investment decision-making. Investment targets with the highest energy class (A) or top-performing primary energy consumption levels are preferred.
  • Reduction of greenhouse gas emissions is promoted in the investment targets by establishing renewable energy contracts for the real estate, and by producing renewable energy at the real estate, e.g. with solar power.

Promoted social characteristics are:

  • The fund monitors and supports the contractors’ corporate social responsibility, employee & site health and safety measures, as well as the implementation of recycling and. the recycling rate.
  • The funded new construction has a positive employment impact.
  • Investments in the fund grow and diversify the housing stock in growth centers by building and providing modern, energy-efficient, healthy, and safe rental apartments

Investment strategy

The fund’s investment strategy is to make direct or indirect investments in rental housing real estate in Finland, particularly in the Helsinki metropolitan area, Turku, and Tampere region. The target return of the fund is to achieve approximately a 7-8% internal rate of return (IRR) net of fees and expenses during the holding period. The investment strategy is implemented throughout the investment process and is accompanied by careful risk management. The investment targets have not been pre-determined. In principle, the fund’s strategy is to acquire joint-stock housing companies from a constructor or other parties and establishes a full liability contract with the contractor for the duration of the construction phase of the residential building. The fund invests in real estate properties and/or projects with the investment commitments of silent partners, which are called in installments with capital calls, and with external debt capital. The holding period of the fund is eight (8) years, but it can be extended for a maximum of two (2) years in one or more installments. The fund is planned to be exited at the end of the holding period. The fund or its investments can be sold as a portfolio or, if necessary, as individual investments.

Before making an investment, Taaleri’s sustainability-related principles and processes as well as sustainability risks are considered when analyzing suitable investment targets and -locations, as well as the life cycle impacts of the investment targets. Furthermore, comprehensive due diligence- and materiality assessments are carried out. These assessments are based on globally recognized standards and frameworks, Taaleri’s internal tools, and commitments. The investment strategy and goals are integrated into negotiations and contracts with the targets. The fund’s goals and planned actions are reported regularly and achieved through active ownership and engagement.

Proportion of investments

Information related to the promotion of environmental and social characteristics can be found in the pre-contractual disclosures accessible on the fund’s website. This fund promotes environmental and social characteristics and considers sustainability risks as part of its investment decision-making. The fund intends to mainly make investments that fulfill the EU SFDR (2018/2088) criteria for sustainable investments and where possible, EU Taxonomy (2020/852) aligned investments. So far, the fund has only made a few investments, therefore the proportion of ‘sustainable investments’ is to be monitored and will be reported as part of the fund’s periodic disclosure.

Monitoring of environmental or social characteristics

The attainment of the promotion of environmental and social characteristics is done by monitoring, collecting, and reporting data on sustainability indicators chosen. These sustainability indicators have been defined by evaluating which quantitative and/or qualitative quantities best describe the strategy of the financial product or the characteristics of the investments in the portfolio. The portfolio’s performance related to these, and other sustainability-related indicators (e.g., principle adverse impact indicators) is monitored regularly and throughout the fund’s lifecycle.

The fund manager and Taaleri Real Estate continuously work in close collaboration with the investment targets to ensure that their sustainability work aligns with applicable sustainability criteria and supports the development of operations through active ownership. The fund manager has the right to perform audits performed by the fund manager or assigned third parties.

Sustainability indicators monitored:

  • Energy efficiency
  • Energy consumption
  • The amount of renewable energy used from the total energy consumption
  • Type of energy used for property heating 
  • Water consumption
  • Location of the building
  • Construction phase recycling rate 
  • Recycling rate during the use phase
  • Construction materials
  • Resident comfort
  • Number of housing units
  • Employment impact of the construction phase
  • Workplace accidents at the construction site

Methodologies for environmental or social characteristics

The fund has determined the above-listed sustainability indicators based on its strategy and goals. The sustainability indicators describe the promoted characteristics of the fund quantitatively or qualitatively. These sustainability indicators are used to ensure and measure the realization of the fund's promoted characteristics throughout the fund’s life cycle. The fund monitors the investment targets’ performance regarding the sustainability indicators quarterly and reports the data annually. A third party may partly estimate, calculate, or verify the reported data. By the fund's strategy, the promotion of environmental or social characteristics and the attainment of required disclosures are ensured by implementing these requirements in transaction contracts. The alternative fund manager ensures that the sustainability-related data is available and reliable and that the sustainability indicators are included in the investment target’s normal reporting.

Data sources and processing

To ensure the availability of sustainability-related data, the reporting maturity of investment targets has been assessed as part of the fund’s due diligence analyses and taken into account as part of the investment decision. Sustainability indicators are monitored and if necessary, data can be verified using a third party.

Processes related to the collection of indicators are constantly being developed and, if necessary, third-party expertise and external data sources can be used for quantitative and qualitative analysis, mapping, and monitoring of sustainability effects. Reliable and science-based assessments can be used temporarily as part of sustainability impact assessment to supplement missing data. The proportion of estimated data will be reported as part of the periodic reviews according to the SFDR regulation. The calculation methods specified in the technical regulatory instructions supplementing the SFDR regulation (2022/1288) are used in the calculation of PAI indicators. Investment target-specific information is treated confidentially and reported indicators are disclosed as appropriately.

As the fund's strategy is to make direct or indirect investments in rental housing properties located in Finland and finance investments in real estate properties and/or projects, the investment properties can vary from projects that are under construction to completed properties. Consequently, the availability of data for the sustainability indicators used to verify the promoted environmental and social characteristics, as well as the principal adverse impact indicators, may vary according to the stage of the investment target’s life cycle.

Limitations to methodologies and data

Life-cycle emission calculations are often based on partial forecasts and use multipliers and estimates, which is why they always involve a small amount of uncertainty or inaccuracy. In addition, it is possible that, despite best efforts, it is not possible to accurately report or distinguish exact figures e.g. generated waste at the investment target site. In such cases, the reported figures may be based on estimates that are proportional to the scope of the activity invested in and the share of the overall economic activity at the site. However, these estimates describe in enough detail the magnitude and scale of sustainability impacts, and thus sufficiently describe the attainment of the investment objective and do not hamper the successful promotion of the environmental or social characteristics.

Due diligence

To ensure that the target companies fulfill the criteria for sustainable investments, they undergo careful ESG-, technical-, financial-, commercial-, tax-, and legal -due diligence assessments. In addition, investees are required to commit to reporting financial information and to develop and put in place appropriate processes for managing and documenting good governance practices (e.g. codes of conduct, including policies on anti-corruption and bribery, fair competition, tax, remuneration, as well as human rights and laborers’ rights. Suitable grievance mechanisms are required to be put in place to ensure stakeholders needs and concerns are accounted for.

Our ESG due diligence process follows the UN Guiding Principles and OECD's recommendations for due diligence assessment processes and includes a double materiality analysis and a sustainability risk analysis, which are carried out by utilizing sustainability risk tools and material request lists, interviews, and data analysis. To support the materiality analysis, the assessment takes into account universal sustainability themes. The findings of the due diligence report are presented and evaluated by the investment committee and are taken into account as part of investment decision-making.

Engagement policies

The engagement policies concerning the fund and its investment targets, aim to ensure that the fund's promoted environmental and social characteristics are realized and that the fund nor its investment targets do not cause significant harm to society nor employees, and that the activities do not violate human- or workers’ rights, nor participate in corruption and bribery.

We regularly monitor and audit our operations and those of our investment targets. If principal adverse impacts described in table 1 of Annex 1 of EU 2022/1288 are observed, operating instructions and principles will be changed to prevent, correct, and mitigate these effects. In addition, we will report and monitor the indicators measuring the principal adverse impacts of the investments and manage these impacts through the continuous development of our guiding principles. In addition, the fund has developed transaction contract appendices that entail the requirements of the EU SFDR (2019/2088) and Taxonomy (2020/852) regulation, to ensure the careful implementation of the fund’s investment strategy. The contract appendix related to the regulatory requirements of the EU Taxonomy are implemented in contracts with investment targets that are considered sustainable investments under the said regulation.

The engagement policies the fund and its investment targets are committed to following are:

  • Taaleri Code of Conduct
  • Taaleri Sustainability Policy
  • Taaleri Partner Code of Conduct
  • Taaleri Real Estate Code of Conduct
  • Taaleri Real Estate Sustainability Principles

Designated reference benchmark

The fund has not been assigned a benchmark that describes the attainment of the environmental or social characteristics promoted by the financial product.

Housing Fund VIII Pre-contractual disclosure (In Finnish)

Statement on principal adverse impacts of investment decisions on sustainability factors

Taaleri Real Estate Sustainability Principles 2022

Portfolio Manager

Jan Hellman

Jan Hellman

Portfolio Management, Residential Investments
Helsinki
+358 44 544 4445