Northeast Real Estate Business

NOV-DEC 2015

Northeast Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Northeast United States.

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48 • November/December 2015 • Northeast Real Estate Business www.REBusinessOnline.com CROSS-BORDER BUYERS STILL HUNGRY FOR U.S. PROPERTIES through August. Sizable trans- actions are in the works, however, and the fgures don't refect indi- rect cross-border capital investments made through seg- regated accounts or private funds man- aged by Blackstone, Lone Star, TPG or other investment managers, notes Borja Sierra, head of U.S. capital markets for Savills Stud- ley in New York. Private buyers, in- cluding funds that pool capital from around the globe, injected $26.2 billion into Northeast commercial properties through the end of August, according to Real Capital Analytics. "There is more competition for ev- ery deal that comes to market, and that continues to drive prices up," he adds. "Many deals aren't perceived as over- seas capital because the entities acquir- ing the properties are in the U.S. But a large portion of the capital that they are trying to deploy is coming from overseas." Getting Familiar To date the increasingly expensive New York and Boston markets haven't fazed foreign investors. As in past years, cross-border buyers are focused on core properties in the offce and hotel sectors, trading security for low yields. Stabilized trophy offce build- ings in New York, for example, are typically selling at the lowest capital- ization rates in the nation — between 3.75 percent and 4.5 percent — amid several quarters of robust rent growth, according to CBRE's cap rate survey for the frst half of 2015. In Boston, of- fce cap rates generally range from 4.5 percent to 5.25 percent. "Over the last 24 months the Cana- dians have been the dominant foreign buyer, followed by the Chinese, and now Norway is in the mix in a big way," says James Murphy, executive managing director at Colliers Interna- tional in New York. "There's no short- age of buyers; it's a completely liquid market." Indeed, at press time Norway's $830 billion pension fund, Norges Bank In- vestment Management, had agreed to partner with the real estate arm of Trinity Wall Street Episcopal Church on an 11-building portfolio in Hudson Square in an estimated $3 billion deal, according to Bloomberg News. Earlier this year Norges Bank purchased 49 percent of the 11 Times Square offce building. Meanwhile, according to a mid- October research report, CBRE expects Japan's Government Pension Invest- ment fund to allocate up to 5 percent of its $1.2 trillion in assets toward al- ternative investments, including real estate. That's part of a broader trend in which Japanese investment funds are increasing their real estate allocations, the frm said. "With the economic environment improving, Japanese investment in the U.S. real estate is likely to increase, with further diversifcation in terms of both region and asset type," says Brian McAuliffe, president of institutional properties for CBRE Capital Markets, INVESTMENT from page 1 Visit the NEW northmarq.com for daily rates, expert views, recent transactions and much more! B O S T O N L O N G I S L A N D N E W J E R S E Y N E W Y O R K P H I L A D E L P H I A U P S T A T E N Y W E S T C H E S T E R N Y As the nation's largest privately-owned servicer and provider of commercial real estate debt and equity, NorthMarq Capital has the strength and stability to execute transactions with certainty and deliver results that suit even the most unique needs. o n ' s l a r g e s t p r i v a t e l y - o w n e d s e r v i c e r a n d p r o v i d e r o f r e a l e s t a t e d e b t a n d e q u i t y , N o r t h M a r q C a p i t a l h a s t h e d t b i l i t t t t t i i t h t i t d Your real estate fnancing should be built on "when"... not "if." A value-add real estate fund managed by CBRE Global Investors in May paid Tier REIT $190.8 million for two downtown Philadelphia offce buildings — the 20-story United Plaza and 27-story 1650 Arch (pictured). The fund closed this summer after raising $1.3 billion from institutional investors in the U.S., Europe, Middle East and Asia. Borja Sierra Savills Studley

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