FAST FOOD FUND

 

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Investment opportunity

SFDR 8 disclosure Annex II

Fast Food Fund

Multi Real Estate Investment Management believes that fast food properties provide a compelling investment opportunity due to their proven location and its operators. They are well-positioned for any economic outlook and aligned with evolving consumer preferences

 

Strategy

The fund will aggregate a portfolio of fast food properties located in the Netherlands, predominantly operated by international brands, such as McDonald’s, KFC, and Burger King

 

Objective

Maximise value with a regular dividend yield and potential for capital appreciation through asset management initiatives

 

Opportunity

Consumer preferences are changing to convenience and affordability resulting in growth of fast food sales. This trend has further strengthened due to hybrid working, continued urbanisation and technological innovation

Fast food properties are ideally positioned to capture this current trend due to its established and agile business, the ability of fast food operators to increase prices with inflation, and by leveraging technology to enhance the mostly young customer experience

 

Investment rationale

Inflation protection expected due to fully indexed leases, long-term lease agreements, high-quality and low-maintenance properties at proven locations, with asset management value creation opportunities

 

FUND DETAILS

The Fund will offer a compelling investment opportunity targeting regular dividends and a 8% IRR

 

 

KEY FUNd CHARACTERISTICS

  • Target fund equity of € 50 million
  • Investment target: 20-25 properties
  • Investment period first 3 years
  • Management fees: 1,5% of committed capital during the investment period and thereafter 1,5% over acquisition costs
  • Fund leverage up to 40% loan to value

 

ASSUMPTION

  • Entry yield range of 6,5%-8%
  • Average inflation during hold period ranges from 2,5%-3% per year
  • Limited vacancy during the hold period
  • Exit yield range of 5,5% – 6,5%

 

EXPECTED RETURNS

  • Stabilised cash on cash 4,7%
  • Fund return 8%
  • Multiple on invested capital 1,54 x

 

Sustainability

The fund promotes climate change mitigation by investing in energy efficient fast food properties.

The fund does not make any sustainable investment and no benchmark is assigned.  The fund aims to have 75% of the investment aligned with the E/S characteristics. The overall long-term goal for the fund is to have: at least 75% of the number of properties owned to have energy labels ranging from A (including A+ to A++++ labels) to B.

All investment proposals contain a sustainability section, which includes the relevant ESG information, such as the availability of Energy Performance Certificates, and a climate risk assessment including energy transition and physical climate risks.

To ensure continuous alignment with the environmental and social characteristics of the fund the fund manager monitors whether the investments comply with the targets set. If not met, the fund manager will take corrective measures and implements a road map that describes how the fund mitigates the issues to ensure that the fund meets the energy efficiency target.

Engagement is not part of the environmental or social investment strategy.

The metric used to calculate compliance is the share or number of investments in energy-efficient real estate assets compared to the total number of assets of the fund. The fund will use the EU-Energy Performance Certificate (EU-EPC) to calculate the energy efficiency, as basis for the assessments of the assets in the portfolio. There are no limitations to the methodologies and to the data sources used.

 

No sustainable investment objective

This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment and does not invest in sustainable investments.

 

Environmental or social characteristics of the financial product

The product promotes an environmental characteristic. More specific it promotes environmental characteristics by climate change mitigation by investing in energy efficient properties.

No reference benchmark has been designated.

 

Investment strategy

The fund invests in fast food real estate. At least 75% of the real estate needs to have a green energy label (A or B).

No good governance is assessed because the fund does not invest in investee companies but only directly in fast food real estate properties.

 

Proportion of investments

All investments are direct investments in real estate properties and are aligned with the environmental characteristics of the product. That means that 75% is aligned with the E/S characteristics, 0% is invested in sustainable investments.

 

Monitoring of environmental characteristics

To ensure continuous alignment with the environmental characteristics of the fund the fund manager monitors whether the investments comply with the Environmental characteristic. If not, the fund manager will take corrective measures and implements a road map that describes how the fund mitigates the issues to ensure that the fund meets the energy efficiency target.

 

Methodologies

The fund uses the following sustainability indicator to measure whether the promoted environmental characteristics are met: 75% of the properties owned by the fund need to have an energy label A or B.

 

Data sources and processing

The fund takes sustainability factors into account in investment decisions by measuring the exposure to energy-efficient real estate assets. The metric used is the share or number of investments in energy-efficient real estate assets compared to the total number of assets of the fund. The fund will use the EU-Energy Performance Certificate (EU-EPC) to calculate the energy efficiency, as basis for the assessments of the assets in the portfolio.

As an EPC is mandatory when real estate is put up for sale, it will be available when making the investment decision. If the seller does not have an EPC, despite the law, it is easily obtainable through engagement of an energy adviser. The energy adviser will assess the real estate asset on-site and will calculate and record the energy performance. Data quality is assured by using energy advisors (this is mandatory). None of the data used will need to be estimated.


Limitations to methodologies and data

There are no limitations to the methodologies of gathering data. As there are no limitations there is no impact on how the environmental or social characteristics promoted by the financial product are being met.

 

Due diligence

All investment proposals contain a sustainability section, which includes the relevant ESG information, such as the availability of technical measures and a climate risk assessment including transition and physical climate risks.

An ESG paragraph is included in the investment proposal, which includes:

  • Comparison with target (75% A or B labels)
  • If the asset does not comply with the set targets, additional measures will be taken.

If investing in an asset would result in the fund not meeting the targets set or if the asset itself does not comply with the targets set, the measures that need to be taken to comply, including budget and time required to mitigate, will have to be described in the investment proposal.

Multi REIM recognizes that risk management is a key element in the investment process. The Management Board is responsible for ensuring investment risks are identified and mitigated if needed, and that the investment process is complied with.

As a member of the Management Board, the Risk Officer (Chief Financial Risk Officer or CFRO) is a member of the Investment Committee to participate in Investor Committee meetings, where investment opportunities are presented and discussed. During these meetings, the Risk Officer verifies whether the risks are properly addressed and monitors if the investment process is complied with and as such also that the sustainability targets are being met.

Moreover, to ensure continuous alignment with the environmental characteristic of the fund, the fund manager monitors whether the investments comply with the Environmental characteristic. If not, the fund manager will take corrective measures and implements a road map that describes how the fund mitigates the issues to ensure that the fund meets the energy efficiency target.

 

Engagement policies

Engagement is not part of the environmental or social investment strategy.