Chinese Lead Asian Overseas Real Estate Investment

March 9, 2017

Carlton Group specializes in raising large amounts of equity and debt from the Far East. We arrange large capital stacks of equity and debt and connects capital to investment grade properties across the globe. We have excellent relations with domestic capital sources and we seek out the best execution for our clients’ capital needs.


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.


Chinese Lead Asian Overseas Real Estate Investment

By Poonkulali Thangavelu


The United States emerged the most-favored overseas market for Asian real estate investors in 2016, for the second year in a row. US investments attracted more than $25 billion of the total $60 billion that Asian investors, led by institutional investors, deployed in overseas real estate, according to CBRE. Chinese investors were the most active, accounting for $28 billion, or 47%, of the total overseas Asian real estate investment, the Los Angeles-based commercial real estate services firm reports.


Even as the Chinese government has put in policies clamping down on Chinese overseas investments, it seems Chinese investors are interested in diversifying their holdings. According to Yvonne Siew, executive director, CBRE Global Capital Markets, “With more scrutiny on cross-border capital flows and rigorous checks by the government which may lengthen the approval process, Chinese outbound real estate investment may moderate, gathering at a more sustainable rate. Instead of larger transactions, Chinese investors may simply opt for a higher number of smaller deals. Regardless, Chinese appetite for global real estate investment will remain solid but more cautious, with Chinese insurers and qualified asset managers being the active institutional investor class.”


The China Business Review expects that there will be short-term issues on the Chinese overseas commercial property investment front as a result of China’s capital controls. However, in the longer term, Chinese insurance companies and private equity funds have a supply of money that is available to meet the US demand for commercial real estate investments.


CBRE reports that the EMEA region – comprising Europe, the Middle East and Africa – was another favored investment destination, attracting 27% of the Asian investment. Asian investors were also partial to their own region, putting in 23%of the investments there, up from 21% in 2015.


New York overtook London as the most favored metro area these investors favored in 2016, although the city’s share of the investment declined from 2015. Other metro areas the investors favored were Hong Kong, Seoul and Sydney. These top five metros attracted 37% of the Asian investment, compared to 42% in 2015, as the Asians diversified their investments more.


“Compared to 2015, more capital was deployed to alternative gateway cities in search of attractively priced opportunities. Places in Continental Europe, such as France and the Netherlands; Chicago, San Francisco and Washington in the US; and Vancouver in Canada, are now on more investor radar screens,” noted Robert Fong, Director of Research, CBRE Asia Pacific.


And while Chinese, Hong Kong, Singapore and South Korean investors continue to head up the list, India is also emerging as a capital source. Japanese capital also stepped up, with the United States a major draw for the Japanese. The commercial real estate services firm expects Japanese overseas real estate investment in 2017 to increase, coming off a low level in 2016.


Looking at preferred property types, the Asian investors favored office properties, which made up half of their total investment, especially going for office properties located in the “gateway” cities of New York, London and Hong Kong. Hotel properties also attracted interest. In fact, a Chinese investor’s purchase of a US  hotel property was the biggest deal of the year, CBRE reports.


Asian investors also showed more interest in niche sectors such as student housing and healthcare, looking beyond the major commercial property types. In a first for the student-housing niche, Singapore investors got into three major deals in that property type. CBRE sees this interest in niche property types as resulting from a quest for higher yields and also “keeping in tune with demographic changes.”


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