Asian Buyers Are Transforming The U.S. Investment Landscape
March 1, 2017
The Carlton Group specializes in raising large amounts of equity and debt from the Far East. We work with international pension funds, insurance companies, family offices, real estate developers, private equity funds, as well as high net worth individuals.
We currently control more than $6 billion of exclusive investment opportunities in Manhattan and in the United States. Please find several mezzanine and/or preferred equity opportunities which could be of interest to you:
– 13% Current Cash-On-Cash Return On 8.4 Million SF Heavily Cash Flowing U.S. Class A Office Portfolio – This is a phenomenal project with a highly successful property owner who is seeking a JV equity partner to recapitalize a heavily cash flowing suburban office portfolio located in prime locations throughout the United States.
– 20% IRR on $20 Million New York Condo Tower Preferred Equity – We represent a best in class developer who is building arguably the best condo tower in New York City. This transaction is fully capitalized including a generous amount of very attractive low cost EB-5 financing. All of the construction money is in place to commence building this beautiful tower now.
– 42% IRR, 3.4x Multiple on New York Entertainment, Retail and Operating Business – You will be partnering with some of the top real estate professionals in Manhattan on this highly profitable entertainment and retail special purpose project. The project has fabulous retail, F&B, parking and a truly unique operating business component which will provide worldwide notoriety and branding opportunities.
– High Yield Manhattan Condo Preferred Equity Opportunity – This property enjoys an excellent Mid-town Manhattan location and your last dollar price per foot is approximately 50% of the retail sales price on a per square foot basis. The estimated return here is north of a 20% IRR.
Asian buyers are transforming the U.S. investment landscape
By The Investor | February 22, 2017
Be it Brexit or the U.S. election, 2016 was a year of uncertainty for the U.S. commercial real estate market as well as the broader global landscape.. But one group found U.S. real estate more appealing than ever before: Asian investors.
According to JLL’s U.S. Investment Outlook, Asian investors accounted for 34.6 percent ($16.8 billion) of 2016’s offshore acquisitions in the U.S., an increase of 3.8 percent from 2015.
The vast majority of that activity (97 percent) came from five powerhouses: China, Singapore, South Korea, Japan and Hong Kong.
“It’s incredible to see the marked shift in Asian inbound capital,” says Lucy Fletcher, a Managing Director with JLL’s Global Capital Markets. “Whereas these top Asian countries accounted for just 5 percent of total inbound investment on average from 2004 through 2007, now they account for 33.5 percent.”
South Korea puts pedal to the metal
One standout is South Korea, a country that only made its first big splash into U.S. commercial real estate in 2009. Since then, South Korean investors, mainly life insurance companies and pension funds, have taken a selective, yet aggressive, approach at buying up mainly Class A assets in the U.S.
“These investors are under pressure to diversify, and they see U.S. real estate as a way to do that outside of stocks and bonds,” said Miyeon Lee, Director of JLL’s Asia Pacific Capital Markets team.
That attempt to diversify has manifested in a very deliberate investment strategy. Nearly two-thirds (66 percent) of South Korean real estate investment goes to the U.S. and 65 percent of that investment is in the office space. Seventy percent of that total investment comes in the form of debt. That disciplined approach has led to a remarkable shift: South Korean investors have transacted in the U.S. at a ratio 11 to one this cycle versus last.
“Debt deals are faster and have the potential for quicker returns, and office has become the preferred asset class thanks to its relative overall stability and availability,” Lee added. “Investors typically look for Class A assets with long leases and credit tenants.”
To date, Korean investments have focused on the gateway cities such as New York, Los Angeles and Chicago. But some investors have begun shifting to secondary markets, especially in markets experiencing significant job and population growth such as Seattle where opportunities that fit their desired profile have become available.
But, Lee notes, you won’t find Korean investors anywhere near development. According to Lee, many life companies and pension funds invested in developments just before the Global Financial Crisis, and that created a lasting impact.
The kind of uncertainty often associated with development projects has typically kept South Korean institutions away, but concerns over a new administration have not dampened sentiment about U.S. real estate.
“We haven’t seen an immediate reaction to the election, but people will be watching closely,” said Lee. “Regardless, the main focus for Korean investors will remain on the U.S. as we move forward.”