Invesco Commercial Real Estate Finance Trust, a REIT that specializes in owning and trading loans secured primarily by North American real estate, has closed its first commercial real estate collateralized loan obligation, called INCREF 2025-FL1.
The $1.2 billion CLO is secured by a portfolio consisting of about 55 percent multifamily-associated loans and 45 percent industrial loans, primarily in southern tier states. Morgan Stanley structured INCREF 2025-FL1, with bookrunning support from Barclays, Citigroup and Wells Fargo.
The upshot of closing the CLO now is improving Invesco’s overall cost of capital and access to liquidity at a time when the company’s liquidity position is already strong, Charlie Rose, president & lead portfolio manager of INCREF and global head of credit for Invesco Real Estate, noted in a company statement.
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INCREF is part of Invesco Real Estate, which has about $90.1 billion in real estate assets under management worldwide, with a highly diversified portfolio across property types and geography. INCREF is managed by Invesco Advisers, a subsidiary of Invesco Ltd. and the registered investment adviser for Invesco Real Estate.
CRE CLOs still see volume drop
The company also said that this is the largest CRE CLO in the U.S. in the last three years. It comes at a time of continued, but slowing, momentum for the vehicle.
CRE CLO transactions fell in the fourth quarter of 2024 compared to recent highs of the third quarter, according to Morningstar DBRS. Issuance volume totaled $1.9 billion, down from a volume of $4.55 billion in the third quarter. The final quarter of the year had two transactions in comparison to the six of the prior quarter.
For the year, however, CRE CLO issuance still gained ground, Morningstar DBRS reported. There were 11 transactions in 2024 that totaled $8.68 billion of issuance, an increase of more than 32 percent from 2023.
Multifamily properties still rule the roost in the CRE CLO realm, representing 74.22 percent of all loans contributed to the vehicles in the first quarter of 2024, though that is a decrease from 76.12 percent in the previous quarter. Other property types include industrial, lodging, retail and mixed use.
