Have Cash, Will Travel
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|40% Brazil. 40% India. 20% US. Take those numbers and go be successful. (We could provide context, but where's the fun in that?)|
|OK, that would be the breakdown of where GID?s Ken Munkacy, left, would allocate a hypothetical $100M: 40% in Brazilian development companies, 40% in Indian mezz structures, and 20% in US multifamily. Also talking foreign capital (and US opportunities abroad) at MIT?s 2011 Real Estate Symposium at Atlantic Wharf on Friday were: Liberty Mutual?s Peter Lewis, JP Morgan?s George Ochs, AEW?s Marc Davidson, and AIG?s Rob Gifford. They discussed how foreigners view the US riskpremium, differing approaches to real estate as an asset, and how to assure quality control.|
|AEW?s Marc Davidson, right, says that often foreign investors look at real estate as a vehicle to store wealth, not so much as a source of yield. Also, sovereign wealth funds, along with pension funds and endowments, are going after distress debt. The risk for Americans investing abroad can be quite high, Marc warns: ?You can get your head handed to you.? It may be tough for investors to get their money out of a foreign country. They may encounter problems with communication, cultural differences, or with local sponsors. He tells us it's hugely important to research deals and markets and get the facts right. With his hypothetical $100M, he?d look to China. In the US, he likes rent growth cities and distress loans.|
|JP Morgan?s George Ochs (third from left) tells us that sovereign wealth funds are such a dominant source of capital that even Ireland (with all of its problems) has a social security type system that will generate a great deal of public capital. Asians have T bills they want to convert to real estate. Capital is coming to the USfrom London, Paris, and some from Germany, George says. His firm has a China fund that's about 75% invested. Although China may have some overbuilding, he tells us they'll absorb the space quickly. His $100M would go to India, China, and some US distress investments. As for quality control abroad, Kevin (fourth) says he struggles with it constantly.|