Invesco Real Estate plans to ramp its lending credit strategy, aiming to originate up to $5bn (€4.7bn) worth of property loans in 2024, after a marked slowdown this year.

The real estate fund manager has so far this year originated only $800m, after investing $3.5bn in real estate debt markets in 2022.

Charlie Rose, managing director and global head of real estate debt for Invesco, told IPE Real Assets: “We have originated over $18bn of loans in the past decade. While lending activity was broadly down in 2023, our expectation is for a strong rebound in our lending activity in 2024 with a goal of $4bn to $5bn of originations next year.”

Retrenchment by banks at a time of rising lending costs is expected to open up opportunities for non-bank lenders such as debt funds.

“Banks have traditionally been a provider of 50% of the debt for the $6trn real estate credit market in the US,” Rose said. “Many of them are now out of the market, and over the past year 32% of the lenders overall for real estate credit have left the market.”

He added: “Year to date, originations have fallen slightly below $1bn cumulatively, but we are projecting ramping back up to that 2022 pace of originations within the next quarter or so,” Rose said.

“In the last 90 days, 70% of our business has been acquisition financing and the other 30% in recapitalisations, generally with borrowers committing fresh equity to these transactions.”

Invesco Real Estate is looking to provide capital for core-plus assets sponsored by major institutional owners. It will focus on existing assets that might need light improvements, including new leasing or possible expansions in the future.

The debt that Invesco provides typically has a loan-to-value ratio of 65%.

“From a property type perspective, we are highly focused on two sectors – industrial and residential, with the latter encompassing traditional multifamily as well as single-family rental and other residential properties,” said Rose.

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