Invesco Real Estate is taking a targeted approach toward increasing its debt and equity portfolio in the coming year, with the firm laying out plans to acquire stakes in external operators and managers.
The Dallas-based manager has always considered these types of acquisitions to expand its reach in sectors such as single-family rental, build-to-rent and ground leases over the past three years. Bert Crouch, head of the Americas at the firm, tells Real Estate Capital USA that Invesco sees additional room to expand into more debt specific strategies in the coming year.
In December, Invesco took a minority stake in Hoboken, New Jersey-based infill industrial investment manager Faropoint. That investment serves as confirmation of Invesco’s long-term conviction in the industrial sector, specifically the last-mile urban infill assets Faropoint has carved out its niche focus on, as well as providing a roadmap for similar deals.
“This type of differentiated access and execution can provide scalable outperformance over an extended period of time,” Crouch says. “That is our end game.”
Raising the stakes
Invesco sees room to grow its commercial real estate lending book further, specifically in growth-geared sectors such as self-storage, medical office and data centers.
“You are going to continue to see us make strategic investments in top-tier, first-class platforms like Faropoint,” Crouch says.
The Faropoint stake marked Invesco’s sixth investment in an external manager or operator since 2020.
“This type of differentiated access and execution can provide scalable outperformance over an extended period of time. That is our end game”
He believes 2024 will be a year of great opportunities, especially for gaining lending market share. “It is a tough time in the market, it is a tough time to be an operating company, especially one that is specific to one sector that needs capital to continue to grow,”
Invesco’s minority stake in Faropoint – a deal that was more than a year and a half in the making – opens the door for both firms to deepen their investment product offerings. Adir Levitas, chief executive officer at Faropoint, tells REC USA his firm is interested in diversifying its products, expanding into the Western US and commercializing its investment product to reach more LPs as opposed to a niche subset of investors.
“Partnering with someone like Invesco, the unknown of what you can do together is larger than the known,” Levitas says.
By acquiring minority stakes in debt and equity managers, Invesco is working to deepen what Crouch already believes is a differentiated investment offering.
In Faropoint’s case, the infill industrial investment manager has three value-add vintages in its investment roster. Crouch says Faropoint’s investments are on the higher-return side of the risk spectrum, and the firm will look to complement this with core and core-plus offerings.
Part of growing the footprint means responding to varying client needs. For investors who want the same infill industrial exposure in a more stabilized, higher current income execution, Crouch says Invesco can help provide that.
Simultaneously, Crouch said Invesco is seeing more demand for credit opportunities. And with banks – both regional and national – taking more defensive lending positions, there is less competition for private credit lenders to gain market share.
“ is a time to take advantage of some of the motivated counterparties – whether that is banks, borrowers or somewhere in between,” Crouch says. “We think there is going to be some real opportunities there.”