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.
We handed over ARETE Park Valašské Meziříčí to the global logistics company DB Schenker
The last unit of ARETE Park Valašské Meziříčí has been completed and handed over to the tenant, the global logistics company DB Schenker. The space of over 4,200 sqm aspires to the international BREEAM® Excellent sustainability certification for buildings. In ARETE Park Valašské Meziříčí we have completed the construction of the third unit with an area of over 4200 m2. The hall will serve as a warehouse and will be used by the logistics company DB Schenker, as well as the two previously completed units in this park. The company has signed a long-term lease agreement for a period of 9 years. The entire park in Valašské Meziříčí provides more than 25,000 m2 of premium space for light manufacturing, assembly and logistics. DB Schenker focuses on global transportation and exchange of goods through integrated logistics. It has 1,850 branches worldwide, over 725 warehouses and more than 72,700 employees. Its history dates back to 1872, when Gottfried Schenker founded Schenker & Co. Today, DB Schenker is a long-term and globally successful company and represents a creditworthy and stable tenant with an international rating for the ARETE Group. “Sustainability and energy self-sufficiency are some of the key areas in which we are actively growing. This would not be possible without our partners and customers who support us and share these values with us. This joint project is one of the important milestones on our path to a sustainable future,” says Tomáš Holomoucký, DB Schenker Regional Director for the Czech Republic and Slovakia. In ARETE Park Valašské Meziříčí, functional photovoltaics with a total capacity of 999 kWp are installed on the roof of two older buildings on an area of approximately 4,600 m2. The plant supplies 950 MWh of clean energy to DB Schenker annually, the rest of the electricity produced is sold to the distribution grid. In addition to its low energy consumption, ARETE Park Valašské Meziříčí is also friendly to native fauna. Two biotopes have been built in the park area – a wetland for amphibians and a unique “frog castle”, which will provide amphibians with shade by the water and shelter from predators or during the winter season. All of this helps not only to increase the sustainability of our buildings, in line with ARETE Group’s ESG strategy, but also to increase the value of the Fund’s assets. The newest hall is in the process of BREEAM® certification for building sustainability and aspires to the Excellent level. One of the older halls in the building already achieved BREEAM® Excellent certification in July this year. Lubor Svoboda, co-founder of ARETE Investment Group, comments on the award: “International studies confirm that managing properties according to the scientifically confirmed BREEAM method reduces the operating costs of buildings and at the same time increases the value of the building, which is particularly important news for our investors.” Park Valašské Meziříčí is part of the ARETE INDUSTRIAL fund portfolio.
We are entering the energy transition business
Martin Pacovský, a prominent figure in the Czech energy industry and a former director of Pražská plynárenská, who also had a long tenure at ČEZ, introduces his latest project with the investment group ARETE in an interview for Hospodářské noviny. Currently, Martin oversees the Energy Transition strategy at ARETE, focusing on investments in energy transition, specifically renewable energy projects and flexible power generation solutions primarily in Western Europe and in the Balkans. Martin’s extensive prior experience are within energy transition sector, such as the construction of wind farms in Romania, and energy production from gas. These make him ideally suited to lead our infrastructure and energy acquisitions. The targeted investments include renewable energy sources, large-capacity batteries, and gas-powered electricity generation to balance the grid during periods of low renewable production. As part of this strategy, we plan to create small energy hubs within our industrial parks, allowing us to efficiently manage energy consumption within the park and trade the generated electricity externally. Our approach emphasizes precise weather forecasting, mathematical modeling, as well as data analysis and positions us well to take advantage of the transitioning infrastructure industry. You can find the interview with Martin here.
The Future Of Energy Transition Brings Investment Opportunities
The future of energy transition supports the energy transition journey and promises consistent returns over time. Are you ready for the change? In his article for the Euro weekly magazine, Martin Pacovský, the Chief Investment Officer of the newly established ARETE Energy Transition strategy focused on investments in energy transition, renewables, power generation and storage solutions, explains how the investment approach within the energy transition landscape has evolved over the last 20 years. In today’s world, building a next generation infrastructure, it’s no longer enough to just understand technology and the operation of power plants. With the rise of renewable energy sources and the growing importance of data, the requirements for professionals in this sector are fundamentally changing. ARETE investment perspective is aligned to the energy transition with a strong focus on producing predictable cash flows. Building and operating a power plant is the easier part of investing in the energy transition. The more complex challenge is making high-quality investment decisions based on accurate predictions of price developments in energy markets, flexibility, and deviations, utilizing advanced mathematical models and data analysis. In the ARETE Energy Tranisition strategy, we therefore incorporate rigorous predictions, and mathematical modeling to our analysis to ensure that our investment decisions are of the highest quality and efficiency. Today, it’s necessary to play on many chessboards simultaneously and have a comprehensive view of the infrastructure market.
Former Head of Pražská Plynárenská Building an Investment Strategy in Energy Transition with Arete
In an interview with Forbes magazine, Martin Pacovský introduces his role in the investment group Arete, where he has been working since April. The new investment strategy, Arete Energy Transition, which Martin leads, focuses on investments in energy transition. The fifty-one-year-old manager brings his experience in the energy sector to this project, while Arete contributes its investment know-how and a database of qualified investors. The newly prepared platform in the form of a fund will primarily invest in wind, solar, and gas power plants, including battery storage. Martin’s primary task will be to seek investment opportunities in the energy sector across Europe, with current interests in locations such as Spain, Germany, and Poland. What was also mentioned in the interview: “I think now is the best time to invest in energy. Uncertainty has entered the market, and it is this uncertainty that brings the most interesting investment opportunities.” You can read the full interview here.
It’s a good time to look at energy with completely new eyes
Martin Pacovský, the Chief Investment Officer of the newly established ARETE ENERGY TRANSITION fund focused on energy investments, was the first guest on the “Vysoké napětí (High Voltage)” podcast in June. He discussed the future of energy, the future of gas, the energy self-sufficiency of the Czech Republic, and the challenges of investing in the energy sector with Vladimír Piskáček and Michal Půr. Do you know how to invest in energy? According to Martin Pacovský, these investments will require working with data. In the future, we can expect a shift in energy sector towards “kind of” stock exchange trading, and those who have good analytical skills, understand data, and can predict consumption and production in the span of days will win. This also applies to investments in various renewable resources. Standalone investments in photovoltaics today do not have a positive return, and the energy sector and investments in this area operate differently than in the past. Owners of photovoltaic power plants without PPA (long-term power purchase agreements for renewable energy at a fixed or indexed price) optimize production based on weather predictions or capacity market forecasts. For instance, they deliberately do not produce or produce 20% less energy and sell this unproduced capacity on the deviation market. They arbitrage between different markets based on their demand and supply forecasts. It’s no longer enough to have a power plant connected to the grid and produce energy when the sun shines. One must have a mathematical model and analysis over their business model and know when, where, and to whom to sell the produced energy. In the show, you will also learn how Martin views the energy self-sufficiency of the Czech Republic and the future of gas. You can listen to the entire podcast here: https://youtu.be/rMf1NGvtRcw
