We handed over the penultimate unit in ARETE Park Rokycany I to Hutchinson
We have completed the penultimate unit within ARETE Park Rokycany I and handed it over to its tenant, the Czech subsidiary of the French company Hutchinson. The construction of the second hall at ARETE Park Rokycany I is progressing according to schedule, offering three rental units spanning more than 15,000 sqm. Late last year, a unit covering approximately 4,800 sqm was completed and handed over to Hutchinson s.r.o. The tenant is the Czech subsidiary of the French company Hutchinson, a member of the multinational conglomerate TotalEnergies. Since 1994, Hutchinson s.r.o. has operated a production facility in another part of Rokycany, specializing in manufacturing rubber components for the automotive industry, including hoses for air, fuel, oil, and water systems. The new space in ARETE Park Rokycany I has enabled the company to establish a comprehensive logistics center. The company has signed a long-term lease and will share the hall with another tenant. Hutchinson is a global leader in vibration control, fluid management, and sealing technologies. With 40,000 employees in 25 countries, the company focuses on creating safer, more comfortable, and more sustainable mobility across air, land, and sea, delivering innovative solutions to highly demanding markets. Our goal is to consistently secure premium tenants—leaders in their industries—and we have once again achieved this with ARETE Park Rokycany I. The total area of the park exceeds 22,000 sqm, and the technical specifications of both halls meet the strictest environmental standards, including achieving BREEAM certification. Both halls are primarily heated using heat pumps. Throughout the entire park, dozens of trees, hundreds of shrubs and subshrubs, as well as hundreds of perennials and grasses, have been planted in alignment with ARETE’s ESG strategy. All species were carefully selected to reflect the region’s native flora, ensuring they seamlessly blend into the surrounding landscape. All greenery planted in the park naturally enhances the aesthetic value of the environment while also improving soil quality and promoting plant biodiversity. Additionally, the park boasts a prime location directly off Exit 62 of the D5 highway, the main transportation route connecting Prague with neighboring Germany. The total value of assets under management in the ARETE INDUSTRIAL fund exceeds €300 million. Geographically, the fund’s leasable space is distributed as follows: 48% is in the Czech Republic, 27% in Slovakia, and 25% in Poland.
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.
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.
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.
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!
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 assess ESG trends in real estate to increase the market value of our properties
We have mapped ESG trends and reporting in real estate. We are one of the few in the Czech Republic to report our ESG activities under Article 8 of the European SFDR (Sustainable Finance Disclosure Regulation), which protects our investments from sudden regulatory changes and environmental risks. ESG appears among the top 5 factors that have had the greatest impact on the real estate industry over the past 20 years. This is according to a 2023 European survey, where ESG rise and focus appear just after low interest rates, the impact of the global financial crisis (2007/2008), urbanisation and the use of technology. At ARETE INDUSTRIAL, we have committed to environmental, social and governance goals as early as October 2023. Our commitments include, for example, ending the use of fossil fuels to generate electricity in all buildings and installing renewable energy sources. This environmental commitment not only increases the long-term market value of our properties, but also prevents losses due to regulatory changes. Among the regulatory changes we are evaluating is the revision of the Energy Performance of Buildings Directive (EPBD). This directive initially significantly dampens subsidies for fossil fuel boilers and subsequently phases out the use of boilers over the next 20 years. This is one of many measures that our comprehensive ESG Strategy is preparing us for. We are one of the few in the Czech Republic to report our ESG activities under Article 8 of the European SFDR. Together with PricewaterhouseCoopers (PwC) in Luxembourg, we have mapped the market in Central Europe and have not come across any other AIF or UCITS fund that has more extensive ESG reporting (under Article 9 of the SFDR) in the Czech Republic. As a “light green fund”, we therefore continue to support sustainability policies and monitor ESG trends, thanks to which our investment strategy is staying one step ahead. Frédéric Vonner, Sustainability and Sustainable Finance leader at PwC Luxembourg, explains the context and the outlook of ESG trends for ARETE: “Running an environmentally and socially sustainable business is increasingly recognized as critical for the real estate industry’s transformation. Driven primarily by the climate crisis, the industry’s move towards responsible capitalism over the next 20 years is expected to significantly influence real estate investment strategies, including Central Europe. Key trends include the imperative to refurbish or develop green and carbon-neutral buildings and the growing importance of social impact. Additionally, regulatory pressures and investor demands are accelerating ESG adoption, which is anticipated to significantly affect asset valuations and investment strategies in the region.”
We’re reducing the carbon footprint of the ARETE fleet
The investment group ARETE has joined The Clean AdvantageTM program and has now received the Clean Advantage® 2023 certificate. This certificate confirms that our group has reduced the carbon footprint of its fleet by compensating for up to 14,771.80 kilograms of CO2. What does this mean? The Clean AdvantageTM program is operated by CCS CZ, a leading provider of fleet solutions in the field of fuel cards and telematics for businesses of all sizes across industries. Membership in this program involves CCS calculating the carbon dioxide emissions of our vehicles for every liter of fuel pumped into our fleet vehicles and investing on our behalf in projects aimed at reducing CO2 emissions in the atmosphere. These are industrially certified carbon offset projects at the local, European, and global levels, selected according to World Resources Institute (WRI) criteria. Offsetting CO2 emissions does not mean that our rides themselves are more sustainable, but rather that we are investing in environmental protection projects. We believe that this is one way we can contribute to a more sustainable future. This certificate demonstrates that environmental respect at ARETE is not just a hollow phrase. ARETE INDUSTRIAL is a “light green” product under Article 8 of the SFDR Regulation and is committed to promoting a policy of sustainability. We are one of the first real estate investment funds in the Czech Republic to implement an ESG strategy according to this European regulation. Reducing the carbon footprint of our business is one of the pillars of this strategy. We advocate for a sustainable and environmentally friendly approach to the construction and operation of buildings and continuously seek further opportunities to minimize the environmental impact of our business.
We Have Already Planted A Green Area Larger Than The 17 Football Fields
The ARETE INDUSTRIAL fund is one of the first “light green” real estate investment funds in the Czech Republic. The fund has implemented an ESG strategy according to Article 8 of the European Commission’s SFDR regulation, under which we have committed to, among other things, planting trees around the industrial and logistics parks in the fund’s portfolio. This time, colleagues from ARETE’s development team went to Zdice, where construction work on a new warehouse of over 7,000 m2 is nearing completion. During a sunny spring day, they planted young trees of several native species. The area is now decorated with wild pear trees, wild apple trees, crab apple trees and rowan trees. They will not only contribute to the beautification of the surroundings and the restoration of the original natural environment, but also to the reduction of the overall carbon footprint of the park. Specifically, as part of ARETE Group’s comprehensive ESG strategy, we have committed to planting one tree for every 500 m2 of new leasehold space developed. At first glance, this may not seem like a large number of trees. However, when you consider that the ARETE INDUSTRIAL fund currently has over 200,000 m2 of leasable space and space under construction, that’s quite a nice tree planting. Since the fund opened, we have already planted a green area of more than 126,000 m2, which is equivalent to the size of more than 17 football fields.
ARETE Group has implemented ESG strategy
The ARETE Investment Group considers responsible investing as one of its priorities. For this reason, we have successfully implemented an ESG strategy for the ARETE INDUSTRIAL fund. As a result, we have become one of the first so-called “light green” real estate funds in the Czech Republic. Responsible and sustainable investment not only brings value to individual investors but also to society. We take pride in being one of the pioneers in the Czech capital market to introduce international standards. “It is clear that capital appreciation can be achieved in a socially responsible manner. Therefore, our ARETE INDUSTRIAL investment fund evaluates not only financial but also social, environmental, and ethical factors in its investment decision-making process,” explains ARETE’s ESG Manager, Josef Novotný. The implementation of the ESG strategy is just the beginning. We also aim to further develop and extend our sustainability policy in the future and potentially expand our criteria considered for the fund’s investments. As a participant in the financial market, we are obliged to report under the European SFDR (Sustainable Finance Disclosure Regulation) directive whether and how we achieve or aim to achieve a sustainable policy. The ARETE INDUSTRIAL SICAV a.s. fund has chosen to support a sustainable finance policy as defined in Article 8 of the SFDR directive. Taking a comprehensive view on ESG issues in the fund’s investment activities, we address all three letters of the ESG acronym. The letter “E,” representing Environment, involves assessing the impact of companies’ activities (primarily properties, in our case) on the environment. From ARETE Group’s perspective, this includes the use of renewable resources in the ARETE INDUSTRIAL fund’s real estate portfolio and taking active care for its surroundings. We also focus on meeting social criteria represented by the letter “S” (Social) through collaboration with local stakeholders. For example, we contribute to local development by working with municipalities. The fund’s second pillar in the social area is the proportion of satisfied tenants with long-term lease agreements, as well as the evaluation and selection of tenants with business activities that are sustainable for the local region in the long-term. The letter “G” (Governance) represents criteria for responsible company management. Our priorities in this area primarily involve full compliance with legislative and regulatory requirements, fair practices, and adherence to ethical standards reflected in the ARETE Group’s Code of Ethics. The ARETE Group primarily supports sustainability in these areas:Environment We reduce energy demand and carbon footprint of our assets: At least 80 % of the properties in the ARETE INDUSTRIAL fund portfolio must have BREEAM certification rating of “Very Good.” We will install photovoltaic panels on all roofs within our property portfolio where technically feasible. We commit to achieving zero use of electricity produced from fossil fuels by no later than the end of 2050. We are committed to reducing direct greenhouse gas emissions and aim to achieve net-zero emissions by no later than the end of 2050. We support biodiversity: Within our group, we will continue our long-term collaboration with organizations that support biodiversity protection. Our support primarily involves providing financial contributions to their activities, cooperation, and consultation during new construction projects. We have committed, as a group, to plant one tree for every 500 square meters of a newly built lettable area. We support the protection of conversation areas and endangered wildlife species. Water Resource Protection and Waste Management: We have been working on waste reduction and recycling in the construction of buildings. At least 60% of waste from new construction projects will be designated for recycling. Social We care for the health, safety, and well-being of employees and tenants: We regularly ask our tenants and group employees about their satisfaction with their workplace environment. This includes lighting, air circulation and filtration, adequate breakout areas, and collaboration on monitoring and reducing CO2 emissions and other sustainability factors. We commit to conducting an annual tenant and employee satisfaction survey. We create sufficient breakout areas in all ARETE Group spaces. Within the group, we promote long-term collaboration with tenants. For ARETE INDUSTRIAL, the fund’s goal is to enter into long term lease agreements for a period of five or more years and to maintain occupancy levels within the fund’s portfolio at a minimum of 90 %. We support local communities: We have been supporting local communities and nonprofitcorganizations. In the past year, we contributed one hundred thousand Czech crowns to the Olympie football club in Zdice. We also provided a financial grant of half a million Czech crowns to the town of Zdice for community development. Similarly, we supported the town of Rokycany and local associations with a total amount of one hundred and sixty thousand Czech crowns. Our employees regularly participate in voluntary activities to support the environment, such as tree planting and waste cleanup. We support charitable organizations, including the Czech Ski School of Amputees (CSSA), which assists individuals with lower limb amputations. We, also contributed to ALSA, Nedoklubko, and the Chance for Cancer Children Foundation through participation in charitable beach volleyball tournament. Governance We advocate ethical values in management and governance: We commit to an ethical code and whistleblowing rules. We have established a policy for proper governance, and in the future, we will collaborate with suppliers who also adhere to the ARETE Group’s Code of Ethics. We regularly inform and train company employees on the above policies and rules, including the ESG strategy, its implementation, and the subsequent compliance with individual criteria. We promote gender equality and ethical values: As a group, we have consistently advocated and supported gender equality. We fill job positions primarily based on the assessment of candidates’ experience, skills, and abilities. The values and work habits of candidates, which must align with our corporate culture and ethical code, also play a role in selection. In terms of compensation, the group has implemented a fair and non-discriminatory remuneration policy to close gender pay gap.
