BNP Paribas Asset Management has exceeded it €500 million target by raising over €700 million for its second senior commercial real estate debt fund.
The latest fundraising bring BNP Paribas Asset Management’s total assets in senior real estate debt to more than €1 billion across two funds.
“We are enjoying strong asset-raising momentum for our second senior fund”, said Christophe Montcerisier, Head of Real Estate Debt, BNP Paribas Asset Management. “In the post-pandemic environment of increased volatility, rising interest rates and mounting inflationary pressures, now is an appropriate time to invest in real estate debt”.
Real estate debt offers both attractive returns, especially relative to equity, he said, and defensive investments backed by properties that provide inflation-linked cash flows with a significant equity cushion.
“We are looking to diversify our product offering with the launch of a junior debt fund”, Montcerisier said. The junior debt strategy is planned for later this year.
The first senior commercial real estate debt fund, which closed in April 2021, has deployed €335 million of capital across 12 assets in Continental Europe. The transactions have been in the logistics, office and residential sectors.
The large size of the commercial real estate debt market, with around €250bn of origination each year, offers wide-ranging opportunities to deploy capital selectively, said Laurent Gueunier, Head of Real Assets, SME Lending and Structured Finance, BNP Paribas Asset Management: “As banks undergo additional constraints, investment opportunities will increase further.”
BNP Paribas AM has a strong sustainability focus and ESG principles embedded in the investment process, he said. Its investment philosophy is to build diversified and granular portfolios and to contribute to financing the energy transition through a focus on improving the energy consumption of well-located properties.
The team’s current preference is for resilient asset types such as offices with efficient ESG ratings and limited vacancy rates; logistics, which are also benefiting from low vacancy rates as well as supply chain disruption; and residential/living, which is less volatile and offers stable cash flows and good liquidity.