The largest alternative asset manager in Europe and a global leader with c.€300 billion of assets under management, BNP Paribas Asset Management Alts secured c.€3 billion of capital commitments for its dedicated Enhanced Commercial Real Estate Debt fund and its discretionary capital to co-invest via separate vehicles.
These commitments came from clients in Europe, APAC as well as the Americas and included a significant commitment to the Commercial Real Estate Debt platform of BNPP AM Alts from both current and new investors.
The Europe CRE debt market has an excellent location to provide favourable returns to prudent investors. The continued withdrawal of banks from lending into European real estate, as a result of tighter regulatory capital and liquidity requirements, has led to higher demand for other forms of finance, especially for development and renovation projects. The COVID-19 pandemic has intensified the polarisation in real asset performance towards highly sustainable grade A buildings. This has increased the capex specifications for investors and asset owners looking to reduce obsolescence risk, further backing up appetite for alternative lending solutions.BNPP AM Alts, for and on behalf of the pan-European Enhanced CRE Debt strategy, will look to construct an investment portfolio of loans between €50 million and €500 million in size guaranteed against institutional quality and well-located assets. The strategy will primarily focus on the creation of senior-ranking loans at higher leverage levels compared to what is usually available from banks, plus development and transitional financing to support construction and redevelopment as well as transitional projects. The strategy may also selectively invest in junior debt where the risk-return profile is attractive.
Investments are going to be made on an opportunity-led basis, but the largest geographic exposure is anticipated to be in the UK and Germany as well as France, with further distributions across Southern Europe and Benelux along with the Nordics. Diversification is projected primarily in industrial and logistics and residential, along with alternative as well as office, retail and hotels.
A substantial amount has already been implemented, and there is an ongoing stream of further possibilities, taking advantage of the firm’s market-leading network of local and dependable real estate teams of experts throughout Europe and its over 20 years of a track record of fundraising and investing in European CRE debt. In that time, BNPP AM Alts has set up over €34bn in the asset class, with its systematic deployment strategy bolstered through-cycle trends.
According to the Global Co-Head of Real Estate at BNP Paribas Asset Management Alts, Timothée Rauly, “Over the past two decades, BNPP AM Alts’ pan-European CRE Debt platform has continually delivered strong through-cycle returns for clients. As real estate debt has become a key component of insurers’ debt strategies and, more broadly, a key component of asset-based finance portfolios, we believe our dedicated Enhanced CRE Debt vehicle is positioned on a segment that will continue to offer a compelling investment, even in the current geopolitical situation. The success of the fundraising programme shows that investors share the same conviction and demonstrates clients’ confidence in the origination and loan management expertise of our team.”
The Global Head of Real Asset Finance at BNP Paribas Asset Management Alts, Antonio de Laurentiis says that “Having secured a significant volume of fresh commitments into the CRE debt sector via a range of vehicles, our goal now is to deploy this capital in a highly disciplined and selective way, as polarization of the market requires it. In this context, having local teams and a real recognized development expertise is appreciated by both borrowers and investors. Leveraging our pan-European network of experts and research-driven origination strategy, which ensures loans are held against institutional-quality assets across a variety of high-growth asset classes, we are confident in our ability to continue to deliver outcomes aligned with our clients’ objectives.”