Invel Real Estate, a European investment company targeting south-east Europe and other select real estate markets, is evolving to become an institutional manager.
Since inception in 2013, the company founded by Chris Papachristophorou, a 15-year Deutsche Bank veteran, has deployed north of €1.6 bn of equity in its traditional co-invest model.
A year ago, Invel raised its first discretionary fund of €65 mln predominantly via “friends and family” but it is now gearing up to attract institutional investors for its new discretionary third-party vehicle.
Papachristophorou, who is both founder and managing partner, is a former global head of opportunistic real estate investments at Deutsche Bank’s RREEF. He told PropertyEU that for the firm’s upcoming discretionary fund, Invel is contemplating contributing not less than 10% of the fund equity as co-investment capital from the General Partner.
This would mirror the way Invel has funded deals done to date with a significant amount of its own equity.
The company would not comment on fund size, but it is expected to have a target of €300 - €400 mln.
In July this year, a public sign of Invel’s aspirations occurred when it announced the hire of Niamh Canavan, formerly of BNP Paribas REIM as the company’s inaugural head of investor relations. Canavan has also worked at Hermes Infrastructure, Bank of America, HSBC, and Cheyne Capital.
Not only that, but Invel has been busy beefing up oversight and advisory functions by appointing experienced European real estate figures, George Kountouris and David Church, as senior advisors. They sit on the board of Invel’s asset management company.
Papachristophorou said, ‘Building on our proven track record, we are confident that the time is now right for our business to take the next step in raising discretionary capital alongside our traditional deal-by-deal and co-investment model.’
He explained that over the years many people had advised him to raise a discretionary fund given the company’s and his personal track record and relationships. However, Invel decided instead to focus energy and attention on sourcing ‘smart’ transactions.
Invel’s first large investment came in December 2013 when the firm took the ‘gutsy’ decision to invest in Greek real estate. Said Papachristophorou: ‘We took Prodea Investments, a company with roughly €900 mln worth of assets mainly leased to the National Bank of Greece, and grew that to €2.4 bn, helping to create one of the most successful REITs in the region, whilst returning more than €700 mln to its shareholders.’
A few months ago, the firm refinanced the Prodea investment with a €600 mln bond of 15 years underwritten by the National Bank of Greece and Piraeus Bank. That refinance followed Invel’s original acquisition of a 66% stake in Prodea in late 2013, and the subsequent exercise of an option to increase the stake to 95% in 2019 when Invel became the largest ever investor in Greek real estate.
The refinancing followed the launch last July by Prodea of the first ever green bond in Greek real estate via a 7-year bond at a 2.3% fixed interest rate, which was heavily oversubscribed. The recent bond will help Prodea progress a new strategy to enhance exposure to energy-efficient buildings and new generation logistics warehouses.
Invel has also established a hospitality platform, Mediterranean Hospitality Venture (MHV), which has grown to 5 hotels and 1,000 rooms (three in Cyprus and two in Greece).
In addition, Invel owns around €800 mln of assets in Italy – a country that Papachristophorou was very active in during his days at Deutsche Bank RREEF, executing several landmark deals such as the repositioning of Italian department store chain, La Rinascentre and entering a sale leaseback deal with Newreal, then the commercial real estate subsidiary of Enel, Italy’s largest power company.
In Italy, Invel has been targeting ‘green office space’ as well as residential. It has recently completed the refurbishment of two ‘green’ office buildings in Milan and Rome acquired in early 2020 that have since achieved 75% occupancy.
‘We had an investment in the UK, that we have fully exited but we are actively looking to do more’, noted Papachristophorou.
Undoubtedly, Greece, Italy and the UK will be at the centre of the new fund, but the investment manager has flexibility to invest in other markets should opportunities present themselves.
For example, the firm has recently acquired a residential platform in Greece and sees opportunity to do the same in Italy and potentially other markets where residential development could provide a compelling investment opportunity, such as Ireland.
The company likes to invest through its operational real estate platforms. It also possesses a team with the capability and appetite to enter into complex debt/NPL situations and fund recaps. This gives Invel’s new fund an air of having a creative, strategic, and thematic special opportunities mindset that could prove very attractive to certain investors.
‘We are looking to take advantage of specific investment themes,’ said Papachristophorou, adding: ‘We also want to be able to cross fertilize by having our operating platforms help source transactions and where suitable, co-invest alongside our platforms. We aspire to become a diversified alternative real estate investment manager.’