Middle East infantry arrives in U.S. real estate markets
Wall Street Journal
Increasingly, government-controlled Middle Eastern funds and private Arab investors are becoming partners of convenience, if not choice, for real-estate developers grappling with tight credit and risk aversion among traditional investors such as pension funds.Middle Eastern investors are looking not at the United States. As Forbes reports, "Late yesterday, Investment Corporation of Dubai (ICD) and Colonial said they have agreed a deal for the sale of a 50 pct stake in the troubled [Spanish] property firm to the investment group."
"There is no question this trend will continue," says Frank Liantonio, executive vice president for global capital markets at real-estate broker Cushman & Wakefield. "We're in an environment where capital structures are strained. Sovereign-wealth funds are perfect candidates for solutions to the problems we're encountering."
Indeed many are making the trek to the Middle East to look for money. Antares Investment Partners, a Greenwich, Conn.-based real-estate investment and development firm, is raising a $500 million fund from Middle Eastern investors and others to jointly buy commercial real estate in the New York metro area. "There is a real sense over here that the time to invest in the U.S. real estate market is now," said Joseph Beninati, Antares co-founder, while visiting Abu Dhabi, in the United Arab Emirates, to meet potential investors.
He says the fund will target well-situated and cash-generating properties with "broken capital structures," such as excessive leverage. Unlike U.S. pension funds, cash-rich Middle Eastern investors have longer time horizons and are rarely under pressure to liquidate, Mr. Beninati says. "They are never in a position where they have to liquidate in 36 months because a pension fund has to be paid."
Labels: sovereign wealth funds