Bringing foreign capital to the US
Panelists discuss the process of bringing in foreign capital, the criteria that foreign investors look to in U.S. properties, and what kind of investments they are looking to make.
Lawrence Selevan: Bringing foreign capital in the US it’s not about the regulations here are so much, unless we get the wrong president, but it's really how they pulled the cash out of their country. So if you have an institutional Chinese investor often especially if they’re majority owned by the Chinese government, they need to get three or four different levels of approval before they're allowed to take the capital out. And over the last four or five months they've had a more restrictive policy than I've seen in a very long time. So a lot of it has to do how you get it out of their country and get it to here. We have a much freer flow of capital in and out of the United States, except when it goes under the Patriot Act.
Give an example of criteria that are important to foreign investors that we may not consider.
Jeffrey Torto: The way I look at it when I'm talking to our investment teams, I generalize a lot that there are certain regions of the country, of the world that are focused on different things. I said before, I think Malaysia, Korea, they are very cash yield oriented, so they're not looking at development for the most part. There may be certain investors that are. The Chinese, we're finding, are more value oriented. They'll do more development, more value add. Germany - we have a number of German clients, again, more cash yield oriented, less development oriented. So it really depends on what part of the country you're looking at, what their criteria is. And we have kind of a basket of different ones. So when we have a, an investment opportunity, we kind of look and see where do we think, what part of the country or what part of the world does that really fit?
Sam Natanoff: If I could just make one more point: because there's subsequent waves of investors and that the pool of capital is getting ever larger, that's an opportunity for US developers and those seeking capital because the largest institutional investors will expect a certain level of deal and the terms will be fixed. But for a new investor they're probably willing to count it, it's a higher risk profile in different terms because they're new to the market, and that's what your opportunity is right now.
Right now, what type of investors, the foreign investors that you deal with, are they looking for core assets, income producing development?
Jeffrey Torto: For the most part, I'd say it's very core income producing properties for the clients that we're looking at. I mean we do have some groups that we represent that are in developments here in Manhattan. But for the most part I would say the majority of the capital, 80, 90 percent or so is very core cash yield focused, and some of the investors actually kind of look at it as they want their dividend and the upside of the real estate is great, but they want their steady dividend. So that's what we're seeing.
Recently EisnerAmper’s Real Estate group hosted the Fourth Annual Real Estate Private Equity Summit. The event brought developers, investors, owners and operators together to discuss what’s happening on the real estate front.
Panelists share leading trends in the industry, including the reallocation from stocks and bonds to real estate assets as well as the evolution of foreign investment and the institutional investor's development of risk.
With the economy in an active investment phase in debt and restructured products across the capital stack, panelists discuss opportunities they see, including transitional assets, different geographies, and non-traditional banking resources.
Panelists describe their outlook on New York and other gateway cities, looking across geographies, asset classes, and property types, as well as slowing job growth or just continued modest growth in general and retail and residential vacancies.
EisnerAmper Partner Lisa Knee asks the panel what their investors are looking for, the tools their investors are using to evaluate the market, the balance of supply and demand in real estate, and how they are planning the real estate cycle.
EisnerAmper Real Estate Private Equity Summit panelists Kenneth Weissenberg, Jonathan Kaufman Iger, Leslie Himmel and Phil Watkins discuss whether the market is in a period of correction, and what’s ahead for vacancies and pricing.
With a slight decrease in sales volume and a slowdown in the land market, Real Estate Services Partner Lisa Knee asks panelists to share the key buying and selling trends on the horizon, including insights on residential product.
Panelists discuss the impact of Brexit, 421A and EB-5 on foreign investment in the United States, and the effects of that capital on development in gateway cities - there's a strong trend of non-US capital continuing to come and invest in the US.
Real Estate Services Chair Ken Weissenberg speaks with panelists on the topic of where capital is coming from in today’s market, how accessible it is for new projects, and the reality of debt and equity chasing real estate.
