
Invesco Real Estate
Learn about the benefits of real estate investing with Invesco, one of the largest real estate investment managers worldwide with a global approach.
Alternative Opportunities is a quarterly report from Invesco Solutions. In each new edition, we look at the outlook for private market assets. In particular, we focus on private credit, private equity, real estate, infrastructure and commodities.
With elevated downside growth risks, high equity valuations, and benign capital markets activity, we’re remaining neutral on how we’re allocating risk within our alternatives portfolio in the second quarter of 2025. In general, we’re more defensive, favouring private debt and hedged strategies versus private equity. Here are key takeaways from each asset class. Read the complete Q2 report.
Jeff Bennett, CFA®, Head of Manager Selection Invesco Solutions
Ron Kantowitz, Head of Direct Lending, Invesco Private Debt
Charlie Rose, Global Head of Commercial Real Estate Credit
Deal flow remains challenged with recent activity well below the 2021 peak. The leveraged buyout (LBO) environment is muted because large valuation gaps have kept many private equity deals on hold. Alternative lenders are poised for a robust year of loan origination due to a surplus of real estate debt dry powder and a continued pullback by banks. We remain constructive on the backdrop for direct lending because of macroeconomic and anticipated deployment tailwinds. Real estate credit remains our preferred way of accessing real estate markets.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
---|---|---|---|---|
Direct lending |
Overweight |
Neutral |
Neutral |
Attractive |
Real asset credit |
Overweight |
Attractive |
Neutral |
Attractive |
Alternative credit |
Overweight |
Neutral |
Neutral |
Attractive |
Source: Invesco, Alternative Opportunities - Q2 2025, pg. 3
Jeff Bennett, CFA®, Head of Manager Selection Invesco Solutions
Private equity faces headwinds in today’s environment. High interest rates will likely be balanced by lower public market valuations post-selloff. While uncertainty looms from tariffs, we believe a favourable regulatory environment for domestically oriented sectors within PE (such as those in the middle market) may provide some counterbalance.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
---|---|---|---|---|
Private equity |
Underweight |
Unattractive |
Neutral |
Neutral |
Source: Invesco, Alternative Opportunities - Q2 2025, pg. 9
Jeff Bennett, CFA®, Head of Manager Selection Invesco Solutions
Mike Bessell, CFA®, Managing Director, Investment Strategist Invesco Global Real Estate
While cap rates remain muted relative to interest rate levels, we view real estate valuations as relatively attractive compared to public and private equity markets. After recent policy and sentiment volatility, the expected Federal Reserve cuts should be supportive of lending costs and cap rates.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
---|---|---|---|---|
Real estate |
Neutral |
Attractive |
Neutral |
Neutral |
Infrastructure |
Neutral |
Unattractive |
Attractive |
Attractive |
Source: Invesco, Alternative Opportunities - Q2 2025, pg. 18
Jeff Bennett, CFA® Head of Manager Selection Invesco Solutions
After stock markets entered a technical correction, hedge funds with lower betas to market risk may be a valuable alternative within a portfolio. Spreads within event-driven strategies remain high due to the limited capital markets activity from mergers and acquisitions as private equity remains sidelined.
|
Overall |
Valuations |
Fundamentals |
Secular trend |
---|---|---|---|---|
Event-driven and arbitrage |
Overweight |
Neutral |
Neutral |
Attractive |
Systematic trend |
Overweight |
Neutral |
Neutral |
Attractive |
Source: Invesco, Alternative Opportunities - Q2 2025 pg. 6
Learn about the benefits of real estate investing with Invesco, one of the largest real estate investment managers worldwide with a global approach.
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