The biggest property groups in the United States are cashing on the problems of their rivals in Europe, with a €3.5 billion spending spree that stands out as a very rare piece of transatlantic real estate investment. Real estate groups in the United States have spent an almost fivefold increase on the amount spent last year in the first nine months of 2012. The revelation comes as the listed property companies in Europe fight to boost their share prices in the midst of fears about the impact on property values of the eurozone crisis.
Property companies do not usually invest outside of their domestic markets but, in this year’s most valuable transatlantic deal to date, around one-third of French retail real estate investment trust Klepierre was bought up by the biggest owner of shopping malls in the United States, Simon, for $2 billion back in March. There have also been a number of smaller investments by United States companies in their European rivals.
Four months ago, back in June, the biggest owner of offices in North America, Brookfield, purchased a portfolio of offices for £520 million from UK Reit Hammerson, while specialist data center owner Data Realty spent £716 million back in July on the purchase of three sites around London that covered around 761,000 square feet of space.
“The sudden increase in transactions reflects the difference in the cost of capital between US listed property companies and European ones,” noted US real estate research group Green Street Advisers property analyst John Lutzius. “US Reits have access of a lot more financial firepower right now.” Lutzius adds that he expects US firms who are buying into the market in Europe will focus on the specialist portfolios of assets.
