Invesco Real Estate has raised $700 million in the first close of its latest higher-returning fund in the US.
If the $1.5 billion hard-cap target for Invesco Real Estate Fund VI is met, the fund will be the largest vehicle to date in the US value-add series.
Nine US investors have committed capital to Fund VI so far, and all of them have previously invested in the series. According to PERE data, the investors include the North Dakota Retirement and Investment Office with a $200 million commitment, and the San Mateo County Employees’ Retirement Association with a $50 million commitment.
PERE has learned that Invesco introduced a few changes with Fund IV, including increasing the GP commitment or co-investment stake. Invesco made a $75 million commitment in Fund VI, higher than the $50 million in previous funds. In addition, the firm also provided an additional $75 million of bridge capital, taking the total investment to $150 million or around 10 percent of the total fundraise. This capital was used toward seed investments for the vehicle, targeting sectors such as single-family rentals.
“The increased GP commitment demonstrates commitment to the strategy and willingness to show our conviction. We also have a desire to get capital invested quickly in what we believe is an interesting vintage year,” says Max Swango, managing director and global head of client portfolio management for Invesco Real Estate. “Investors have made a career [out of] trying to find an absolute, best operating company for each sector. Now, however, we believe there is an overwhelming consensus among consultants that investors today want exposure to the vintage year. They do not want to pick a sector.”
PERE also understands that Invesco also changed the vehicle’s nomenclature from its predecessors in the series. Fund III, IV and V had the word ‘value-add’ in the name, but that was removed from Fund VI. Instead, the fund is being described as pursuing all types of higher-returning strategies. PERE also understands that Fund VI has “priority on all high-return dealflow at the firm in the US,” according to a source.
The strategy would include development, build-to-core investments and sub-performing, distressed and mispriced real estate equity investments.
Fund VI would target similar property sectors as previous funds, including industrial, senior housing, affordable multifamily, traditional multifamily, office, life sciences and retail. The firm could also potentially expand the investment remit to include self-storage, single family rentals and data centers, along with the potential acquisition of sub-performing or non-performing debt and origination of preferred equity and debt investments.