Invesco Real Estate has recently launched European real estate debt fund has completed two further transactions, both in the UK. The fund – the Invesco Commercial Mortgage Income – Europe FCP RAIF (CMI Europe) – has delivered a €32m (£28m) whole loan secured against a portfolio of five purpose-built self-storage assets in the West Midlands, encompassing 293,150ft². The assets are high quality, modern, newly-built stores with strong ESG credentials, rating between BREEAM Excellent or Very Good, and EPC Ratings of either A or B.
In addition, the fund has delivered a €34.3m (£30m) whole loan secured against a seed portfolio of multi-let, light urban industrial assets located in separate locations across London. The circa 50,000ft² initial portfolio is to be let to catering and delivery tenants, known as ‘dark kitchens’. The sponsor and operator has an existing portfolio of similar assets which are proving successful due to high demand for food delivery services in the capital.
The fund, which prioritises lending on sustainable assets with prime ESG profiles, completed its inaugural transaction at launch: a senior loan facility to finance a pipeline of six French and three Spanish logistics facilities, all pre-let to one of the world’s largest online retailers. The borrower itself is a market-leader in the application of high ESG standards in the construction of logistics assets. With its open-ended approach providing greater liquidity, the fund aims to offer institutional investors a stable, high yielding income stream and attractive risk-adjusted returns. ESG criteria are embedded into its credit analysis, due diligence and approval process, with the team analysing the quality of the assets, business plans and borrowers.
Andrew Gordon, Managing Director – Fund Management at Invesco Real Estate said: “These latest transactions highlight the demand from European borrowers for effective institutional lending solutions as well as the increasing attractiveness of the asset class for investors. By carefully financing the right assets, we believe that European real estate debt can offer a safe yet significant return for investors as the market prepares for the possibility of higher inflationary pressures for longer. We favour lending opportunities to sectors and niches which could provide market resilience given the prospect of a prolonged inflationary environment. These include traditional sectors in core locations, where only the most sought-after properties will be in a position to achieve rent increases in line with inflation. Demanding high ESG standards for all collateral is key to achieving this.”