Bridgepoint Group sees growing investment opportunities in overlooked real estate sectors despite higher interest rates. According to Sina Finance, the London-based firm manages $125 billion in assets and has expanded from private equity and private credit into infrastructure, secondary funds and real estate. This summer, it announced the acquisition of Kayne Anderson Real Estate, which manages more than $22 billion in assets. Bridgepoint CEO Raoul Hughes said the deal added a top-tier real estate investment platform and significantly strengthened the firm’s presence in the U.S.

Higher rates have put pressure on many real estate funds. Some invested heavily in commercial and residential property in 2021, when rates were near zero, and now face higher borrowing costs, lower valuations, fewer transactions and more defaults. Al Rabil, co-founder and CEO of Kayne Anderson Real Estate, said higher rates could drive industry consolidation, creating opportunities for investors with sector expertise and investment discipline.

Rabil highlighted medical office properties, small-bay industrial warehouses serving small businesses and e-commerce merchants, and multifamily housing. He said medical office vacancy rates had remained below 10% for more than 20 years, with demand exceeding supply, and that Kayne Anderson focuses on high-margin areas including oncology, neurology, cardiology and diagnostic centers. People aged 65 and older visit doctors seven times as often as those under 45, he said. Small businesses contribute 47% of GDP.

For multifamily housing, Rabil said large amounts of capital flowed into the sector in 2021–2022, when many projects were financed based on 10-year U.S. Treasury yields of around 1%. He said much of that debt is now nearing maturity and that some high-quality assets have problems in their capital structures.

Hughes said higher rates have had limited impact on most of Bridgepoint’s private credit and private equity portfolio companies. The firm focuses on high-growth, high-margin businesses, he said. Hughes added that he would prefer rates to stabilize at current levels rather than rise further, and said the rate environment would not materially impair the ability of its equity portfolio to generate returns.