Invesco Real Estate has launched its first real estate debt fund in Europe. The Invesco Commercial Mortgage Income – Europe FCP RAIF (CMI Europe) is a Luxembourg-domiciled, open-ended fund with a €1bn (£850m) initial fundraising target. It is primarily backed by insurance capital.
The fund, which will prioritise lending on sustainable assets with prime ESG profiles, has already completed its first transaction: a senior loan facility to finance a pipeline of six French and three Spanish logistics facilities, all of which are prelet.
Andrew Gordon, managing director of fund management at Invesco, said: “The aim of the fund is to invest in opportunities offering the best possible risk-adjusted returns available to a pan-European real estate debt vehicle. As a commercial actor and a relationship-based lender, this means lending across core real estate sectors such as residential, office and logistics, as well as alternatives such as self-storage, student accommodation, data centres and life sciences.
“Importantly, our new fund prioritises lending on sustainable assets. Borrowers’ business plans will need to demonstrate a focus on sustainability, while development loans, for instance, will focus on assets that meet best-in-class principles. Our investor base is rapidly refocusing on investments with fundamental ESG qualities.”
Andy Rofe, managing director and head of Europe at Invesco, added: “The launch of our first European debt fund underscores the maturity of the sector with the introduction of a pan-European, diversified open-end vehicle. The targeted returns for CMI Europe aim to offer a significant return premium over corporate bonds yet with a similar risk profile and stable cashflows, which we believe will be able to provide high-quality and predictable quarterly income streams for institutional investors.
“Real estate debt has traditionally been a UK-focused asset class, but with the retrenchment of banks following the global financial crisis, a European approach has become very attractive. With a focus on high-quality properties, we are looking to invest in all types of loans, including stretched senior, whole, junior and development finance. When we’ve identified the right asset, the right sponsor and the right business plan, we will invest in whichever part of the debt stack that we believe provides the best balance of risk and return for investors.”
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