New private markets offering provides accredited investors greater access to private real estate credit investments
DALLAS, TX June 29, 2023 – Invesco Real Estate today announced the launch of Invesco Commercial Real Estate Finance Trust, Inc. (“INCREF”), a private fund focused on bringing private real estate credit to accredited investors by originating, acquiring, and managing a diversified1 portfolio of loans and debt-like preferred equity interests related to commercial real estate. INCREF is a non-exchange traded, perpetual-life real estate investment trust (REIT) and will offer its shares pursuant to SEC Rule 506(c). Individual investors’ demand for private markets continues to grow and this new offering is the latest investment strategy in the Invesco Real Estate suite of solutions available for wealth management platforms.
“We are pleased to expand our private credit offering to wealth management platforms as investors continue to look for ways to optimize risk-adjusted returns, especially during periods of uncertainty, high inflation, and rising rates,” said Bert Crouch, CEO of INCREF and Head of North America for Invesco Real Estate. “Our approach to real estate lending is focused on stable, current income, and prioritizing capital preservation. The headwinds in today’s capital markets environment provide a particularly compelling entry point for Invesco Real Estate’s credit strategy.”
INCREF implements a “property first” and “credit over yield” investment strategy by working with experienced sponsors seeking loans for commercial real estate properties in markets in which the Invesco Real Estate has strong convictions. The fund will primarily focus on “core-plus” credit and invest in Invesco Real Estate team’s highest conviction ideas across the commercial real estate universe, including multifamily, industrial, single-family rentals, and self-storage.
“Private real estate credit is gaining the attention of accredited investors, who are seeking strategies to access an asset class that has not been traditionally available to them,” said Charlie Rose, President and Lead Portfolio Manager of INCREF and Global Head of Credit for Invesco Real Estate. “The recent pull-back of regional banks, coupled with the significant increase in short-term interest rates, is resulting in a rare opportunity for commercial real estate lenders. Our established credit platform is positioned to take full advantage of the current dislocation in the near-term while seeking to minimize volatility through all stages of the credit cycle in the long term.”
In May 2023, INCREF originated its first industrial property loan in Phoenix, AZ and its first multifamily property loan in Sunnyvale, CA, collectively totalling $178 million of gross loan commitments. With a strong emphasis on relationship lending, INCREF’s portfolio management team focuses on being an all-weather lender for repeat and relationship borrowers. Both loan originations were secured for third-party borrowers with whom Invesco Real Estate has long-term relationships.
These transactions demonstrate Invesco Real Estate’s deep convictions in sectors with strong fundamentals which they believe are well-positioned to benefit from continued secular and cyclical tailwinds. As of March 31, 2023, Invesco Real Estate had originated 180 loans in North America totalling $15.4 billion in originations and 232 loans globally totalling $17.3 billion in originations.
“For the last 40 years, Invesco Real Estate has benefitted from a rigorous, cycle-tested investment process to uncover attractive opportunities across the real estate investment spectrum,” said R. Scott Dennis, Chairman of INCREF and Global CEO of Invesco Real Estate. “INCREF will leverage the depth and breadth of Invesco Real Estate’s underwriting, structuring and relationship-driven sourcing capabilities while seeking to provide its stockholders with stable, current income while also improving portfolio diversification.”
There is no guarantee that INCREF will provide diversification. Diversification does not guarantee a profit or eliminate the risk of loss.
Invesco Commercial Real Estate Finance Trust, Inc. is a monthly net asset value (NAV) non-listed real estate investment trust engaging in a continuous private offering exempt from the registration provisions of the Securities Act of 1933 pursuant Rule 506(c) of Regulation D promulgated by the SEC that will originate, acquire, and manage a portfolio of loans and debt-like preferred equity interests secured by, or unsecured but related to, commercial real estate primarily located in North America. Its credit over yield philosophy focuses on quality sponsorships, conservative leverage levels, floating rate loans, and business plans that seek to prioritize capital preservation over what we believe to be potentially excessive risk. INCREF seeks to provide stockholders with stable, current income in the form of monthly distributions. INCREF expects to diversify its portfolio over time, including up to 30% in Europe and Asia. INCREF is managed by Invesco Advisers, Inc. (the “Adviser”), a subsidiary of Invesco Ltd. and the registered investment adviser for Invesco Real Estate, the real estate investment center of Invesco Ltd.
About Invesco Real Estate
Invesco Real Estate is a global leader in the real estate investment management business with $91.4 billion in real estate assets under management, 587 employees and 21 regional offices across the U.S., Europe and Asia (as of December 31, 2022). Invesco Real Estate
invests across the risk return spectrum, from core to opportunistic; in equity and debt; listed and direct; locally and globally. Invesco Ltd. is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life.
This press release does not constitute an offer or solicitation to buy or sell any securities. An offering can only be made by the applicable offering memorandum. An investment in INCREF is highly speculative and involves a high degree of risk and is intended only for investors who do not require immediate liquidity. Prospective investors should be able to bear the complete loss of their investment. A copy of the applicable offering memorandum must be made available to you, and you should read it carefully prior to an
investment in INCREF to fully understand all of the implications and risks of the offering. Prospective investors should contact their financial professional for a copy of the offering memorandum.
Summary of Risk Factors
An investment in INCREF is highly speculative and involves a high degree of risk and is intended only for investors who do not require immediate liquidity. Prospective investors should carefully consider the following risk factors, together with the applicable offering memorandum, before deciding to purchase INCREF shares. There can be no assurance that INCREF will be able to meet its investment objectives or otherwise be able to successfully carry out its investment program. Investing in INCREF involves a high degree of risk and is intended only for investors with a long-term investment horizon and who do not require immediate liquidity or guaranteed income. An investment in INCREF is not a direct investment in real estate. Prospective investors should only purchase INCREF if they can afford a complete loss of their investment. Risks include, but are not limited to, the following:
- INCREF has no prior operating history, and there is no assurance that it will achieve its investment objectives.
- This is a “blind pool” offering, which means that you will not have the opportunity to evaluate INCREF’s future investments before it makes them.
- Since there is no public trading market for INCREF’s shares, repurchase of shares by INCREF through its share repurchase plan will likely be the only way to dispose of your shares. INCREF’s board of directors may modify, suspend or terminate INCREF’s share repurchase plan if it deems such action to be in INCREF’s best interest and its stockholders as a whole. As a result, INCREF should be considered as having only limited liquidity and at times may be illiquid. There is no assurance INCREF will pay distributions in any particular amount, if at all. Distributions may be modified and are at the discretion of the board of directors. There is no assurance INCREF will pay distributions in any particular amount, if at all. INCREF may fund any distributions from sources other than cash flow from operations, including, without limitation, loan repayments, borrowings, return of capital or offering proceeds (including from sales of common stock), and INCREF has no limits on the amounts it may pay from such sources.
- The purchase price and repurchase price for INCREF’s Shares will be based on the prior month’s NAV and will not be based on any public trading market. While there will be independent valuations of INCREF’s credit assets quarterly, the valuation of credit assets is inherently subjective, and INCREF’s NAV may not accurately reflect the actual price at which its net assets could be liquidated on any given day.
- INCREF has no employees and depends on Invesco Advisers, Inc. (“Adviser”) to conduct its operations. The Adviser will face conflicts of interest as a result of, among other things, the allocation of investment opportunities among INCREF and Other Invesco Accounts (as defined in INCREF’s Registration Statement on Form 10), the allocation of time of its investment professionals and the substantial fees that INCREF will pay to the Adviser.
- INCREF is conducting a “best efforts” offering. If INCREF is not able to raise a substantial amount of capital on an ongoing basis, its ability to achieve its investment objectives will be adversely affected.
- Principal and interest payments on any borrowings of INCREF or its subsidiaries will reduce the amount of funds available for distribution, loan originations and investment in additional real estate credit investments.
- There are limitations on the ownership and transferability of INCREF’s shares. No person or group may directly or indirectly acquire or hold more than 9.9% of INCREF’s outstanding shares of common stock in value or number of shares of all classes or series, whichever is more restrictive.
- If INCREF fails to qualify as a REIT and no relief provisions apply, its NAV and cash available for distribution to its stockholders could materially decrease. • Real estate related credit investments are generally risky, illiquid and are subject to the risks of ownership and operation of income-producing real estate. • INCREF will originate or purchase real estate related credit investments such as loans secured by real property or pledges of the borrowers’ interests in a limited liability company or partnership that holds improved or unimproved real estate. As a result of changes in interest rates, financial markets, or adverse developments with a respective property, INCREF may be unable to obtain repayment of the loan or dispose of its interest at a sufficient price to recover its investment. In the event of a default of a mortgage loan, INCREF will bear the risk of loss of principal to the extent of any deficiency between the value of the mortgage collateral and the principal amount of the mortgage loan. There is no assurance a defaulted mortgage loan will be liquidated successfully or in a timely fashion.
- Whole loan mortgages generally are not government guaranteed or privately insured. A whole loan mortgage is directly exposed to losses resulting from default and foreclosure. In the event of a foreclosure, the liquidation proceeds upon sale of such real estate may be less than INCREF’s net investment, resulting in a loss to INCREF.
- Mortgage investments have special inherent risks relative to collateral value. INCREF may not be able to take the steps necessary to protect its mezzanine investments in a timely manner or at all, and there can be no assurance that the rate of return objectives of INCREF’s or any particular investment will be achieved. To protect its original investment and to gain greater control over the underlying assets, INCREF may need to elect to purchase the interest of a senior creditor or take an equity interest in the underlying assets, which may require additional investment by INCREF.
- The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
- Leverage created from borrowing or certain types of transactions or instruments may impair liquidity, cause positions to be liquidated at an unfavorable time, or increase volatility.
- INCREF may make substantial investments in underperforming or other distressed assets utilizing leveraged capital structures. These investments involve a high degree of financial risk and can experience severe financial difficulties. There can be no assurance that INCREF’s rate of return objectives will be realized or that there will be any return of capital.
Other Important Information
The opinions expressed in this press release are as of the date hereof, are based on current market conditions and are subject to change without notice. There is no obligation to update the opinions expressed herein in the future to the extent market conditions or other facts alter the opinions expressed herein. The opinions expressed herein may differ from those of other Invesco investment professionals. Stockholders, financial professionals and prospective investors should not rely upon the information presented in this press release when considering an investment in INCREF, instead prospective investors should review the offering memorandum. Certain information contained herein discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. The information contained herein does not constitute a recommendation of any investment strategy or product for a particular potential investor. Prospective investors should consult a financial professional before making any investment decisions.
Invesco Real Estate is the real estate investment center of INCREF’s sponsor, Invesco Ltd., a leading global investment firm (“Invesco”). The Adviser uses the personnel and global resources of Invesco Real Estate to provide investment management services to INCREF. Information regarding Invesco and Invesco Real Estate is included to provide information regarding the experience of INCREF’s Adviser and its affiliates. An investment in INCREF is not an investment in the Adviser or Invesco, as INCREF is a separate and distinct legal entity.
Invesco Advisers, Inc., is the investment adviser for INCREF; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. (member FINRA/SIPC) is the dealer manager for the INCREF offering. Both entities are indirect, wholly owned subsidiaries of Invesco Ltd.