Invesco is juicing incentives for investors to keep and add capital to a $12.7B U.S. real estate fund facing a flood of redemption requests.
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Invesco Core Real Estate-USA, known as ICRE, is facing an “elevated redemption queue” that has led management to try to stem the tide of cash out of the fund, according to an investor letter first reviewed by Bloomberg. A source familiar with the letter confirmed the accuracy of the reporting to Bisnow.
Incentives on offer include a 20% cut to management fees for investors without any redemption requests and a one-year waiver of fees for anyone who adds $10M to the fund, which primarily serves institutional clients.
ICRE investors will also have the opportunity to cash out as part of a tender offer that has pledged to buy shares at 95% of their net asset value, according to the letter.
Invesco’s open-ended fund has a $2.2B redemption queue, and investors in recent years have been pulling cash at a faster rate than in the past. Redemptions have represented 5.3% of net asset value since 2022, higher than the historical average.
Invesco and senior management are also adding up to $150M to the fund “to reinforce alignment,” the letter says.
“This is a decisive step we’ve taken to strengthen and reposition ICRE as the market enters the early stages of a new cycle, with improving fundamentals, easing credit conditions, and historically attractive entry points,” an Invesco spokesperson said in a statement to Bisnow.
Atlanta-based Invesco, a global asset manager with more than $2.4T in assets under management, is facilitating the tender offer with IDR Investment Management, an affiliate of an existing shareholder.
ICRE’s total returns were up 3.5% this year through the end of June, and Invesco hired a new portfolio management team to reposition its investment mix last year.
Nontraded REITs are facing a new wave of redemption pressure following a pandemic-era capital crunch that had largely been erased by the end of last year.
Germany’s DWS Group missed redemption requests by more than 30% for RREEF Property Trust in June as investors pulled more cash than fund covenants allowed. Starwood Capital Group froze redemptions outright at its $22B nontraded REIT in April in a move meant to preserve value as investors looking to exit Starwood Real Estate Income Trust were adding pressure on it to sell assets.
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