Taaleri Rental Home Fund is a closed-end residential fund. The fund develops affordable and high-quality rental apartments in Finland’s growing urban centres. The fund is open to new investors and actively looking for new real estate investments.
Taaleri Rental Home Fund is a closed-end residential fund established in 2017. The fund is Taaleri's impact real estate fund. The fund develops good quality rental apartments that are leased below market rents in Finland's growing urban centres. The fund aims to offer a real solution to the housing shortage experienced in many growing urban centres.
The fund targets stable annual cash flows of c. 3.5–4.5%. The fund provides many Finnish non-profit institutions with a natural way to invest their assets while promoting a solution to important social issues.
The fund's portfolio currently consists of 14 completed properties and 2 properties under construction. The fund pays attention to energy efficiency of its assets and seeks to minimise the carbon footprint of its properties both during and after construction.
The fund is closed but it can choose to accept new investors. The fund is actively looking for new real estate investments.
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
According to the EU SFDR (2019/2088) regulation, this financial product, the Rental Home Fund, is labeled as an Article 8 fund. This financial product promotes environmental and 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 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 by reporting them annually. Good governance is a minimum requirement, and the investments’ good governance is ensured by conducting comprehensive internal and external 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 principles of responsible investing and other sustainability-related 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 financial product’s goals and planned actions, which are reported regularly, are achieved through active ownership and engagement.
The attainment of the promotion of environmental and social characteristics is done by monitoring, collecting, and reporting data on the 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 financial product’s periodic reporting.
The financial product 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 financial product and its investment targets aim to ensure that the financial product's promoted environmental and social characteristics are realized and that the financial product 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 financial product 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 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 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 financial product commits to reducing its principal adverse sustainability impacts and ensures that its investment activities do not cause significant harm to any sustainability objectives 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 financial product defined in Annex 1, Tables 2, and 3. The additional indicators have been determined using a materiality analysis. In addition, the financial product monitors and reports the principal adverse impacts and actions that are taken and sets goals for reducing the adverse impacts of the investment target for the next reference period. By the financial product'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 internal and external due diligence reviews, which consider 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
The financial product promotes environmental and social characteristics, among other characteristics. The financial product aims to create affordable rental apartments in growth centers where there is a demand for reasonably priced rental homes, and which are under pressure to solve social challenges through the provision and development of rental homes. The financial product also aims to build efficient and practical homes, and it promotes combinations of environmental and social characteristics as far as possible, such as:
- Within the investment, prerequisites for environmentally friendly ways of moving are created (for example, by choosing locations near public transport connections and by building charging points for electric cars), and prerequisites for efficient recycling are created (for example, with functioning waste sorting points).
- The destinations aim to utilize energy-efficient and/or low-emission solutions (including solar panels, geothermal, , as well as low-power household appliances and lighting, as well as other investments or renovations that improve energy efficiency).
- In the sites, attention is also paid to, among other things, the safety and longevity of the structures, good indoor air and sound, the space use efficiency and appropriateness, supporting the sense of community, the investment suitability for the environment, and for different user groups, and aesthetic quality.
- The Manager requires contractors to, for example, take at least legal labor law and protection actions.
Investment strategy
The financial product's investment strategy is to make direct or indirect investments in rental apartment properties located in Finland's growth centers. The financial product can build rental apartment properties, buy constructed rental apartment properties or buy apartment shares that are given out for rent. The return target is based on numerous assumptions and contains forward-looking statements that are not guarantees of future financial performance. The financial product's actual operating result may differ significantly from the expression in the context of forward-looking statements. Many factors, such as the risk factors related to the alternative financial product's investment technique, can affect the financial product's result. The return target is only a target, and thus should not be considered as a forecast, estimate, or calculation of the financial product's future performance.
The financial product’s purpose is to generate cash flow for investors by renting out the rental apartments it owns to the tenants. The financial product can acquire rental apartment properties for its ownership at its discretion by building rental apartment properties, buying ready rental apartment properties, or buying individual apartment shares for the purpose of renting.
Before making an investment, Taaleri's sustainable investment principles are implemented within the investment targets and locations, the sustainability risks of the investment targets and the impacts during the entire lifecycle are taken into account, and comprehensive due diligence reviews and materiality analysis are carried out by using internationally known tools, commitments, and policies. The financial product's strategy and goals are considered in the negotiations and agreements. Through active ownership and engagement, we set goals that are measured, defined, and reported regularly.
Before investing, Taaleri’s principles of sustainable investment and sustainability-related 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, tools, and commitments. The investment strategy and goals are integrated into negotiations and contracts with the targets. The financial product’s goals and planned actions are reported regularly and achieved through active ownership and engagement.
To ensure the financial product's investments follow good governance practices, investments undergo careful financial, tax, and legal due diligence assessment. In addition, the financial product requires investments to commit to reporting financial and sustainability-related information and to develop and put in place appropriate processes for managing and documenting good governance practices (e.g. Code of Conduct) In addition, the investments are assessed by different policies and regulations. Taaleri Real Estate has a grievance policy and publicly available grievance mechanisms in place. The financial product measures and reports equality among board members and employees.
Proportion of investments
Information related to the promotion of environmental and social characteristics can be found on the fund website and in the financial product's periodic disclosures. This financial product promotes environmental and social characteristics and considers sustainability risks as part of its investment decision-making. The financial product 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 proportion of ‘sustainable investments’ is to be monitored and will be reported as part of the financial product's periodic disclosure. Direct exposures in investee entities and all other types of exposures to fund manager entities do not differ.
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 the 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 financial product'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. In addition, investment abilities to fulfill the SFDR and possible EU Taxonomy reporting requirements are carefully reviewed, to ensure that the financial product complies with all regulatory requirements.
Sustainability indicators monitored:
- Energy efficiency
- Energy consumption
- The amount of renewable energy used in the total energy consumption
- Type of energy used for property heating
- Water consumption
- Location of the building
- Recycling rate during the use phase
- Construction materials
- Total amount of the electric car charging points
- Resident comfort
- Number of housing units
- The employment impact of the construction site
- Workplace accidents at the construction site
- The rental level of investment properties in relation to properties of the same age located in the same area to the market rent level
Methodologies for environmental or social characteristics
The financial product has determined the above-listed sustainability indicators based on its investment and sustainability strategy and goals. The sustainability indicators describe the promoted characteristics of the financial product quantitatively or qualitatively. These sustainability indicators are used to ensure and measure the realization of the financial product's promoted characteristics throughout its life cycle. The financial product 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 financial product'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 financial product’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 to calculate PAI indicators. Investment target-specific information is treated confidentially and reported indicators are disclosed as appropriately.
As the financial product’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 and sustainability-related information and to developing, maintaining, and putting 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 regularly out by utilizing sustainability risk tools and material request lists, interviews, and data analysis. To support the materiality analysis, the assessment considers universal sustainability themes. The findings of the due diligence report are presented and evaluated by the investment committee and are considered part of the investment decision-making.
Engagement policies
The engagement policies concerning the financial product and its investment targets, aim to ensure that the financial product's promoted environmental and social characteristics are realized and that the financial product 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 financial product 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 financial product’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 financial product 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 financial product has not been assigned a benchmark that describes the attainment of the environmental or social characteristics promoted by the financial product.
Statement on principal adverse impacts of investment decisions on sustainability factors
Taaleri Real Estate Sustainability Principles 2022
Sustainability -related disclosures in periodic reporting:
Sustainability related periodic disclosures 1.1.2023–31.12.2023 *
*Report updated on 27th of May 2024 (added a statement on the fund's principal adverse impacts “PAI”)