A real estate investment trust (REIT) is officially saying “hello” to CLOs.
Invesco Commercial Real Estate Finance Trust (INCREF) just closed its very first commercial real estate collateralized loan obligation (CRE CLO), Commercial Observer can first report.
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The $1.2 billion managed CRE CLO pool, INCREF 2025-FL1, is secured by a portfolio of multifamily and industrial loans and was structured by Morgan Stanley, with Barclays, Citigroup and Wells Fargo also acting as bookrunners in the deal.
“Our culture of innovation has kept us on the leading edge of commercial real estate for 40 years,” Bert Crouch, CEO and director of INCREF and head of North America for Invesco Real Estate, said in a statement. “This transaction further demonstrates our deep real estate capital markets expertise and commitment to excellence in real estate finance.”
The market has seen plenty of volatility recently, but the deal priced well despite the market bumps, Charlie Rose, president and lead portfolio manager of INCREF and Global Head of Credit for Invesco Real Estate, told CO.
“Invesco is deeply committed to the commercial real estate lending space with a $21 billion track record of lending throughout all stages of the market cycle,” Rose said. “Our business is defined by our ‘credit over yield’ and ‘property first’ approaches to lending, with an emphasis on relationship lending — leading us to actively lend through periods of market volatility. We have consistently emphasized maintaining diverse sources of financing, which allows us to meet our borrowers’ needs in good times and bad.”
Rose said INCREF identified an opportunity early this year to issue a CRE CLO, leaning into strong bond buyer demand and the chance to further diversify INCREF’s financing sources.
“We’re pleased to announce that this issuance, which priced efficiently amid volatile market conditions, is the largest diversified CRE CLO issued in the U.S. in the past three years, evidencing the market’s confidence in the sector,” Rose said.
Go-time came at an interesting time for INCREF. April 2 — also known as “Liberation Day” — sent the stock market into a tailspin but caused only a momentary pause in the deal’s issuance.
“We are fortunate to have deep and diversified access to a broad range of financing sources and, as such, took an opportunistic approach to issuing this CRE CLO,” Teresa Zien, managing director and head of capital markets at Invesco Real Estate, told CO. “We were on schedule to market the deal the week after Liberation Day, but market volatility led us to pause for the next few weeks. As bond buyers started to come back into the market, our ultra-high-quality collateral pool led several to proactively reach out to us about our deal. Ultimately, we were able to price efficiently by the end of April.”
That collateral pool is composed of 55 percent multifamily loans and 45 percent industrial loans concentrated in the “Smile states,” Zien said (think California to the Carolinas). She added that the platform takes “both a top-down and bottom-up approach to underwriting collateral and generally focuses on property types around which we have the strongest conviction as a firm.”
INCREF’s team will also support the INCREF 2025-FL1 CRE CLO.
In July 2024, Rose told CO that the REIT, which launched in May 2023, had already passed $1.4 billion in originations across 22 senior multifamily and industrial floating-rate loans. That total has now soared to $2.8 billion as of March 31. The forward charge shows no signs of slowing.
“Invesco Real Estate is known for our focus on lending to best-in-class institutional borrowers with prudent underwriting and a quality bias,” Rose said. “During times of volatility, our financing partners consistently focus on us as a through-cycle partner given our tight credit standards and differentiated portfolios. We were oversubscribed for this CRE CLO and ended up placing bonds with multiple large buyers, speaking to the quality of our collateral.”
Cathy Cunningham can be reached at ccunningham@commercialobserver.com