Large US-based property companies have their corporate eyes firmly on European properties and are cashing in at an impressive rate. In the first nine months of this year, corporations have spent 3.5 billion euros on foreign real estate investments.
This figure represents an increase of five times the amount spent in 2011 and is an unusual business tactic, since most companies do not invest in this manner. (They prefer to put their money into domestic markets instead.)
The most lucrative transaction of the year to date has involved US shopping mall owner Simon, which bought close to a one-third share of KIEpierre. The French retail real estate investment trust was bought for $2 billion in the spring.
Brookfield added to its portfolio of office space by closing a deal with UK REIT Hammerson for £520 million. Data Realty also increased its holdings in July by spending £716 million to purchase three properties in the London area measuring a total of 761,000 square feet.
The US companies have funds available to spend on acquiring more assets at present than their European counterparts and are not afraid to use them. American firms are also more likely to specialize in a particular niche market when looking to add to their holdings, while European companies are more apt to take a generalist approach to investing.
This strategy is starting to change and as a result, is making European firms more likely to be targeted for potential takeovers by American commercial property investors.
Hammerson is firmly entrenched in the shopping centre market, and analysts point to the company as being a target for US REITs which want to access the United Kingdom market.
The company holds a minority of its assets (only five per cent) in foreign markets. According to Green Street, 42 per cent of that figure represents holdings in Europe, with properties in France and the United Kingdom accounting for the majority of this allocation.
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