A milestone

Institutional Real Estate, Inc. launched a new website and an overhaul of its publications at the start of the year. I manage the newsfeeds on the website and the IREN publication, which went from a weekly email newsletter to daily emails with a wrap-up of the week’s news every Friday.

Six months have passed. And it has been busy. We have reached a milestone for IREN. We made a goal for IREN of breaking and writing 200 original news stories by the end of June.

We accomplished our 200-story goal early. The 200th IREI News story was: “CCCERA invests $60 million in two real estate funds.”

To date, IREN has published 226 original news stories. And the month isn’t even done yet.

Although this is a quantity set goal, it does not overshadow the quality of news IREN aims to publish. I hope you find these original stories informative with high value.

Some of the big original headlines news IREN covered in the past six months includes:

To read more IREN original news, see the IREI News tab on our newsfeed. IREN hopes to continue the momentum and reach 600 original news stories by the end of the year.

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

AndreafinalwebAndrea Waitrovich is web content editor at Institutional Real Estate, Inc.

Home sweet home

The economic recovery from the global recession is starting to pick up as unemployment goes down and consumer confidence increases, but when it comes to the U.S. housing market, some regions are recovering quicker than others.

In first quarter 2013, nearly 1.5 million single-family homes in the United States were at some stage of the foreclosure process, according to data from RealtyTrac. This number is up by 9 percent when compared with foreclosures in first quarter 2012, but marks a 32 percent decrease from the peak of the recession, when 2.2 million properties were foreclosed on in December 2010.

The rampant foreclosures that were happening across housing markets in the United States forced many homeowners to go back to renting. With apartment construction slowing due to the economic downturn, the limited new supply and increasing demand for rental properties have caused apartment rents to increase annually since midyear 2010, with a 9.5 percent gain during 11 consecutive quarters, equating to a 3.5 percent annualized growth to $1,093, according to IREN’s coverage of Marcus & Millichap’s Second Quarter Apartment Outlook. Annual rental growth equates to lower cap rates and greater revenue for investors in multifamily properties, as the national average monthly rent increased to $1,121.

As a renter and hopeful future home buyer, this statistic is discouraging — but institutions that invest in apartment housing have cause to celebrate, as decreases in homeownership this past quarter created 300,000 new renting households.

Even as new renters are entering the multifamily residential market, single-family homes are becoming more affordable in many markets. RealtyTrac recently released a list of the top 15 cities for purchasing bank-owned fixer-uppers for a bargain, the top three being Detroit, Chicago and Cleveland. As a result, many potential buyers are considering beat-up single-family homes both an investment and a place to call home.

It is notable that institutional investors also are taking another look at distressed single-family homes as a risky market with untapped potential. The Blackstone Group was the number one buyer of single-family homes last year, spending $1.5 billion on 10,000 foreclosed properties in the United States, according to Bloomberg. Also looking at the single-family home market is Colony Capital, which has a target fundraising goal of $2 billion for a fund that will acquire distressed single-family homes. It is expected that the fund will have invested $1.5 billion in single-family homes across the United States before the end of next year.

In the past, institutional investors have shied away from investing in single-family homes because the management is much more hands-on and it takes a long time to build a portfolio of properties, but investors have found various methods for making this investment with less risk, such as acquiring a portfolio of homes from local investors or property managers, rather than making individual acquisitions.

As wallets start expanding and individuals look into buying houses for the first time, or downgrading to a rental, house hunters and investors have more options than before.

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

SarafinalwebSara Kassabian is a reporter with Institutional Real Estate, Inc.

Does it have to be this complicated?

When it comes to infrastructure investing, there is a large disconnect between those who need the capital and those who have the capital.

Everyone agrees that the infrastructure financing gap is huge. Depending on your sources, between $50 trillion and $57 trillion is estimated to be needed worldwide between now and 2030 for new and refurbished infrastructure projects. This is more than the value of all the current existing stock. Additional estimates add $45 trillion to that figure for projects needed to mitigate the effects of climate change during the next 40 years. This means we need to spend more each year for the next 20 years than we have in the previous two decades put together.

Everyone also agrees that we need new sources of capital because banks and governments don’t have anywhere near enough.

Where the agreement begins to fall apart is in where those new sources of capital will come from. Government officials have looked around and have begun coveting the resources of institutional investors. They see huge piles of cash, and investors who typically are looking for income-producing, stable, long-term investments. On paper, it appears to be a match made in heaven. But appearances can be deceiving, and the devil is in the details.

Investors see lots of problems when it comes to investing in infrastructure — a lack of long-term data, an almost complete lack of liquidity, lack of transparency and the lack of a benchmark. But the main sticking point is no one wants to take on demand risk. The greatest need is in greenfield development. But investors don’t want to do that — nor do many managers — because there is no real way to confidently estimate the demand for the project when it is finally finished several years down the road.

At the Euromoney/OECD Infrastructure Summit in Paris last month, a slow tally of the audience showed that not a single person in attendance was investing in greenfield infrastructure.

Peter Johnston, executive director, infrastructure, at Hastings Funds Management, declared, “Greenfields aren’t for us.”

Nor are they for one of the largest infrastructure investors in Canada, the Ontario Teachers Pension Plan (OTPP), which has more than $10 billion in infrastructure AUM. Darrin Pickett, OTPP portfolio manager, noted, “Greenfield development is not in our mandate because we don’t want to take the risk. The need for infrastructure is in the greenfield space, but investors don’t want that. The solution would be for governments to build the projects, then sell them to investors and recycle that capital back into new infrastructure.”

But if governments could afford to build it, don’t you think they would? No mayor wants to look out the window of his city hall office and see cars plunging off a collapsing bridge.

Although municipalities don’t want to take on demand risk any more than investors do, they might be willing to do it because it’s the type of thing governments should do. But they need to get the financing for that first project. Local institutional investors would seem to be the perfect lender-of-choice because their constituents would benefit not only from the improved infrastructure, but possibly from the jobs the development would entail, and certainly from the returns that would fund their eventual pensions.

The Dutch government and its two largest pension funds announced just such a deal last year. The pension funds, ABP (managed by APG) and PfZW (managed by PGGM), agreed to lend €125 million ($170 million) for the country’s N33 highway project, which will link Assen and Zuidbroek. In return, the funds will receive an inflation-linked payment. It was intended as a pilot project, with more to follow.

Last week, however, the Dutch finance minister Jeroen Dijsselbloem announced that although the government is pleased with the results of the partnership, the N33 project would be the only one financed in this way. The problem? The government thinks inflation will go up and doesn’t want to include inflation-linked funding in its future deals. The pension schemes also think inflation will go up, and they therefore do want to include inflation-linked payments.

Having this inflation-linkage is crucial to get pension funds on board because pension schemes are often responsible for inflation-linked payments to their pensioners.

In a press release, Henk Brouwer, the president of ABP, is quoted as saying, “We can only meet the call to invest in Dutch infrastructure if the conditions are attractive to the fund and its participants. By rejecting the possibility of inflation compensation, the minister strongly limited the attractiveness of investing by pension funds in the Netherlands.”

The Dutch government and pension funds have a history of working together. If even they can’t agree on an investment structure, how are others going to do it?

In the United States, a consortium comprising the states of California, Oregon and Washington and the Canadian province of British Columbia is proposing a regional solution through the West Coast Infrastructure Exchange. Still in its infancy, the idea is to work together to encourage public-private partnerships (PPPs) across borders.

Will it work? Hard to tell. The history of PPPs isn’t pretty. Some high-profile failures, such as the London underground PPP, which failed within six years and saw the infrastructure revert to public hands, have made everyone cautious.

Infrastructure investing is so frustrating because it just seems so clear that it should work for all parties — so why isn’t it? The need is so obvious; why can’t we find the right solution?

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

Sheilaflippedfinalv3stSheila Hopkins is managing director – Europe and infrastructure with Institutional Real Estate, Inc.

Real estate and the impact on real people

This business is so rife with industry parlance that it sometimes seems we forget there are real human beings involved in the things we do.

Interest and cap rates, property sectors, yield, mezzanine financing, CMBS, alpha, managed accounts, separate accounts, open- and closed-end funds, REITs, indices, portfolios, actuarial underwriting …

Need I go on?

Even when we talk about “demographics” and the “demographic trends” that drive real estate investing decisions, it sounds devoid of flesh and blood.

Then again, sometimes the impact of what we do becomes so immense the human dimension — thankfully — becomes irrepressible. Such was the case when The Economist published an article reporting that in just the past 20 years nearly 1 billion earthlings have been elevated out of extreme poverty. Between 1990 and 2010, the number of those living in the most squalid conditions fell by half as a share of the total population in developing countries, from 43 percent to 21 percent — a reduction of almost 1 billion people.

“Take a bow, capitalism,” says The Economist.

Allow me to horn-in on that toast by inviting institutional real estate investors to also take a bow.

Twenty years of mammoth global investments made by pension funds, foundations, endowments, sovereign wealth funds and the like (as well as the countless people who put institutional real estate money directly to work) have made a major impact in the form of spanking new infrastructure, housing, retail and office centers, as well as overall improved living conditions and wealth creation.

Consider that poverty in all its forms is receding most rapidly within the world’s emerging economies, the very places institutional real estate dollars are aggressively applied.

We have more work to do. There are another billion people awaiting liberation. Of the 7 billion people alive on the planet, 1.1 billion live below the internationally accepted extreme-poverty line of $1.25 a day. The United Nations has begun drawing up a new list of targets to replace the Millennium Development Goals set in place September 2000 and scheduled to expire in 2015, The Economist reports.

At current pace, another billion people could be rescued from the most extreme forms of poverty by 2032. Then again, that’s assuming the blistering pace of technological innovation does nothing to expedite our ability to create wealth and improve living conditions. I rather doubt that. Everything we know about history and technology tells us that improvement in living conditions and wealth creation will only accelerate.

One of the evolutionary process’s major sources of fuel is institutional real estate investment.

So it’s worth repeating: Take a bow, institutional real estate investors. There is real flesh and blood behind all that industry parlance, and the impact you’re delivering is making a real difference in people’s lives.

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

MikeCfinalwebMike Consol is editor of The Institutional Real Estate Letter – Americas.

Not-so-fun bubbles

6-12 Girl blowing bubblesIs there a kid anywhere in the world who doesn’t thrill at the thought of blowing and chasing after soap bubbles? In the global real estate arena, however, “bubble” is a dirty — and much debated — word.

The pain of the U.S. subprime residential mortgage–backed securities fiasco was the bursting bubble felt around the world. After years of slogging through a painful recovery since the onset of the global financial crisis in 2008, the U.S. housing market is rebounding, albeit slowly.

But in China, there is still much debate about whether its soaring residential market is experiencing a bubble, and when it might burst if there is one. In a recent interview with CNBC, Chris Brooke, president and CEO of CBRE China, discussed why investing in China’s housing market — which could go up 8 percent this year and 3 percent in 2014, according to an RTRS poll — may not be as risky as some may think. Brooke cited strong underlying demand and fundamentals, from first-time homebuyers or those upgrading to new homes, as reasons why China’s housing market is not as troubled by a property bubble as it may appear at first glance.

Additionally, unlike in the United States or Spain, homebuyers in China are typically all-cash buyers and not as reliant on the use of leverage, which makes them less susceptible to short-term volatility in the market, Brooke said. This allows Chinese homebuyer to hold onto these assets for longer periods of time, even with potential slow price growth in the residential sector.

However, Brooke indicated, the full effects remain to be seen of the Chinese government’s enforcements in March of a 20 percent capital gains tax and higher down payments, which have recently started to slow transaction volume, especially in second-tier markets.

“The government has a very delicate balance to strike between controlling prices but allowing the residential markets continue [to grow] given the importance of the real estate sector in the overall economic growth story in China,” Brooke noted.

CBRE’s March 2013 report for the 70-city CBRE China National Commodity Housing Price Index (January 2006 = 100) recorded a 10th consecutive month-on-month increase, up 1.4 points, edging the index up to another new historical high at 149.8. Of the 70 cities surveyed, 68 cities had a month-on-month price increase.

In early June, Robert Ciemniak, founder, CEO and chief analyst of Real Estate Foresight, wrote a blog post that includes an animated chart based on changes during the past two years to the SouFun CREIS 100 Cities House Price Index for Major Cities.

In his post, Ciemniak notes that while new governmental policies and restrictions in China have garnered much attention, “data for the last few years would suggest it’s only the monetary policy that really carries weight on house prices.” In an earlier post, Ciemniak explained that the loosening of monetary policy in mid-2012 — especially the two interest rate cuts — clearly reflect the long rebound in housing prices since that time.

Prices for new homes in China were up 6.9 percent year-over-year in May, according to a June 3 Bloomberg News article reviewing data from SouFun Holdings, which tracks housing price changes across 100 cities in China. Despite the Chinese government’s recent plan to extend a trial property tax program beyond Shanghai and Chongqing, SouFun expects gains in housing prices to “remain relatively strong” given “rising land prices, supply shortages in key cities and expectations of looser monetary policy.”

Key to watch will be how China’s government goes beyond short-term policy changes to try to curb demand and housing price growth — efforts to contain potential bubbles — to actually restructure its residential market with respect to issues such as taxation and land supply, according to CBRE’s Brooke. Such restructuring will take time and won’t be without challenges, but is necessary for the long-term health of China’s residential market.

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

Jennifer-Molloy91x119Jennifer Molloy is editor of The Institutional Real Estate Letter – Asia Pacific.

The future of online spending and e-commerce?

In this day and age, almost everyone has bought at least one item online, whether it be office supplies, clothing, gadgets and technology-related items, beauty products, or even pets, for God’s sake.

What’s the one item that isn’t listed above that is starting to take the online retailing and e-commerce market by storm?


Whether you call it the supermarket, grocery store or market, and whether you shop at Safeway, Albertsons, Vons, Lucky, Publix or the Piggly-Wiggly (yes, I went there), nothing beats the idea of not having to make a list, drive to the store, gather your items, wait in long lines, drive home and unpack everything like clicking a few buttons and having your groceries delivered to your front door.

A majority of large supermarket chains offer this option, but not with the option of ordering food and your favorite DVD or pair of shoes. Amazon.com recently announced the planning of a major roll-out of an online grocery business that it has been quietly developing during the past few years, according to Reuters.

While food is a low-margin business, Amazon could outperform similar online grocery services by delivering orders for higher-margin items such as electronics at the same time. With the success of the test of AmazonFresh in its hometown of Seattle for the past five years, Amazon is now planning to expand its grocery business starting with Los Angeles as early as next week and the San Francisco Bay Area later this year. If those new locations go well, the company may launch AmazonFresh in 20 other urban areas in 2014, including some outside the United States.

In a Business Insider article posted on SFGate, Bill Bishop, a prominent supermarket analyst and consultant, says everyone in the grocery business up to Walmart is threatened by the plan: Amazon’s expansion plans are a potential threat to grocery chains such as Kroger Co., Safeway Inc. and Whole Foods Market, as well as general-merchandise retailers Walmart and Target Corp., which also sell a lot of groceries.

“The fear is that grocery is a loss leader and Amazon will make a profit on sales of other products ordered online at the same time,” says Bishop. “That’s an awesomely scary prospect for the grocery business.”

This giant possible shift in online retailing may not only change the online grocery shopping business, but the retail business in general. We’ll have to wait and see what the future holds.

Denise DeChaine is special projects editor of Institutional Real Estate, Inc.

Easier said than done

If it is true that the first step to solving a problem is admitting there is a problem, then perhaps we are on the road to “solving” climate change; however, as the OECD’s National Adaptation Plan report published in April reminds us, it is the transition from acknowledging a problem to taking action to address the problem that can be the most daunting. The OECD notes:

A review of companies’ climate risk disclosures indicated that while three-quarters of surveyed companies acknowledged climate risks to their business, only one in four assessed the extent of their risks or possible risk management options, and only one in 20 implemented risk management actions.

This paradigm reflects the nature of climate change research to date — it has focused on identifying and showing there is in fact a problem, but the job of developing the resources and tools leaders need to make climate-based decisions have lagged. The report notes:

Part of the challenge are the demands both for more sophisticated climate change projections and data, and that they be made easier for end users to apply. Progress on the former has been more rapid than on the latter.

And for many infrastructure owners and operators, this is bad news. As the report notes:

This lack of action is a particular concern in the case of economically significant sectors, those that are climate sensitive and those where investment decisions have long-term implications. For these reasons, the provision and management of infrastructure plays a major role in countries’ national adaptation planning, both in terms of the need for additional investment for addressing climate risks and the need to climate-proof existing infrastructure and ongoing investments.

The OECD hopes the private sector can help countries adapt to climate change by providing products and services that can help combat the effects as well as alter their practices to be more aligned with policy. According to the OECD, the private sector can help with climate change adaptation by:

  • Providing tools and guidance — these go beyond general information provision and provide high-quality, accessible climate data, guidance managing climate issues, and tools assessing climate risks and planning adaptation responses.
  • Maintaining regulatory coherence — governments have emphasized the need to ensure regulatory frameworks are conducive to risk management, including mapping overlapping and conflicting regulatory regimes. For example, governments have updated design codes so that new developments are resilient to projected climate change impacts.
  • Establishing reporting requirements — this is a less common approach but has been used to ensure companies in key areas, such as providers of critical national infrastructure, regularly assess and report on their exposure to climate risks. A notable example is the United Kingdom Adaptation Reporting Power Commission.
  • Using procurement policies — governments have recognized their powers as procurers to encourage and require private sector suppliers to take account of climate risks.

The opportunity to finance investment in climate change strategies such as renewable energy also exists. The OECD explains:

As a starting point, governments have encouraged the private sector to secure its own resilience to climate change, which ought to reduce the need for public investments in adaptation. Beyond this, several government representatives stated that the public sector should consider how to attract private financing for adaptation investments.

The OECD detailed some ways private sector investment might better be matched to investment in a report titled Mobilising Investment in Low Carbon, Climate Resilient Infrastructure, and recommends developing “a domestic policy framework for encouraging private sector investment in low-carbon and climate-resilient infrastructure.”

Of course, the stakes are high, as researchers from the University of Southampton Highfield in the United Kingdom point out in their report A Global Ranking of Port Cities with High Exposure to Climate Extremes. The report includes a ranking of the top 20 cities in danger of climate-fueled flooding whose combined future asset exposure totals $26.8 trillion.

Drew Campbell is senior editor of Institutional Investing in Infrastructure.

Not as it seems

This period of economic stagnation and turpitude in Europe — where, quarter after quarter, we await the GDP numbers for the various countries, and groan if they’re negative or breathe a sigh of relief if they’re positive — is throwing up some weird signals. As ever with Europe, the picture varies across countries, and so do the signals.

On the one hand, the United Kingdom recently missed on a triple-dip recession — it may even not have suffered the reported double dip last year, following further assessment of the numbers — and there is now talk there about the first signs of green shoots. (If true and if the green shoots can be nurtured into more substantial economic growth, that’s probably good timing from the coalition government’s point of view, with an eye on the 2015 general election. Maybe it’s true what they say about talking to plants to encourage them to grow.) On the other hand, first the European Commission, then the IMF and now the OECD have revised downward their short-term economic forecasts for the euro zone. They were bad before and they’re worse now.

And then there’s the real estate markets. Q1 2013 numbers from the main property consultants point to encouraging growth in transaction activity compared to a year ago — according to Cushman & Wakefield, for instance, the Q1 2013 number of €32.7 billion is 15.7 percent higher than that for Q1 2012, and Jones Lang LaSalle has the year-on-year increase even higher, at 26 percent. The consultants each have their own way of adding up the transaction numbers so come to different totals but the trend line is clear. A good start to the year, and upward.

But real estate markets are also throwing out weird signals. It’s well known, for instance, that investors in this climate are favoring safe-haven markets like London and Paris and are fighting shy of areas like southern Europe that are at the heart of the euro zone’s problems. (It’s interesting, too, that Mario Draghi, head of the European Central Bank, has yet to be tested on his we’ll-do-whatever-it-takes remedy for the euro zone’s ailments, so we don’t yet know whether that medicine works.) But all is not as it seems.

Recent research from Savills has shown that, contrary to expectation, markets perceived as stronger are offering higher rental concessions to tenants than markets perceived as weaker. Safe havens they may be, but even London and Paris have office landlords who are reacting to market conditions and tenant demands and protecting their interests. The Savills survey of headline rents and rental incentives offered by landlords in 19 European markets over the period since 2008 found that London City, Paris CBD and Paris La Défense currently offer some of the highest available discounts — approximately 20 percent of the total months over a lease term.

“Over the past five years, landlords in some of Europe’s prime office markets have lengthened rent-free periods to support headline rents,” explains Julia Maurer, European research analyst at Savills. “This means that markets such as London and Paris, where landlords should be feeling more confident, have surprisingly large incentives on offer.” On average, rent-free concessions for prime CBD space have increased by 21 percent across Europe in 2013 compared with 2008, the research found, and currently account for an average 12 percent of the total rental period in the markets examined.

The highest percentage of rent-free months offered in the markets surveyed was in Milan (25 percent), followed by the two Paris markets, CBD and La Défense (21 percent each), and London City and Dublin (each 20 percent). By way of contrast, Athens, where prime headline rents have fallen significantly over the past five years (by 30 percent), only offers 2 percent of months rent free. Savills points out that the higher take-up levels that are now becoming evident across Europe — more green shoots? — could lead to a reduction of incentives offered by landlords, and therefore have a positive impact on real rental growth.

Incentives, says Savills, are a good indicator of the general market sentiment in real estate but are determined by the usual mix of market factors, including supply and demand and individual local characteristics. In a Europe that is seemingly hell bent on federalism in the manner of the United States, it is clear that local market forces power events. The federal-intent politicians ought to remember that.

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

Richard Fleming is editor of The Institutional Real Estate Letter – Europe.

Sentiment shift: If you listen, you can hear a lot

I recently wrote here and elsewhere about how sentiment appears to have shifted from bullish to apprehensive in the Asian institutional investor community.

The exact opposite kind of sentiment shift appears to be taking place in the European institutional investor community.

Asian institutional investors today are becoming increasingly concerned and fearful about asset bubbles. Europeans, on the other hand, have been concerned about deflation, stagnant economic growth and the potential implosion of their bond markets and with them, the continued viability of the euro as a common currency.

Having weathered what most believe is the worst of this “it” storm, Europeans today are starting to think about investment prospects once again.

We saw signs of this sentiment shift among the 24 investors who attended our last Editorial Board meeting in Barcelona last fall, and confirmed it once again among the 17 or so investors who joined us at our second annual Visions, Insights & Perspectives – Europe Investor Roundtable in Berlin in April (100 in total attendance).

The hallmark of both of these meetings, of course, is intimacy. What makes them different is the opportunity for investors to speak with each other, and with the investment managers who attend. We downplay the importance of formal speeches and panels, which really are there to establish context for the much more important interplay that takes place between participants at the small-group roundtable sessions that take place repeatedly throughout the program. And, as Yogi Berra reportedly once noted, “If you listen, you can hear a lot.”

The investors who spoke during this most recent conference were still largely focused on core investing, although much less strategically than they have been in the past. Today, it’s less a matter of which markets or which regions or which property types or which financial structures, and much more a matter of the specific fundamentals associated with each individual opportunity. In short, investors in Europe have shifted from a largely strategic point of view to a much more tactical, much more opportunistic frame of mind.

A few of the investors even noted that they recently have been willing to entertain well-defined opportunities in such previously redlined markets as Spain and Northern Italy.

But the strategic view is not altogether absent in Europe. Almost everyone engaged in the discussions at the conference was intrigued by the opportunity to step in and help plug the huge financing gap. As European banks continue to struggle with overleveraged balance sheets, lending volume has slowed down considerably. With the exception of mezzanine financing, for which a whole plethora of funds recently have been formed and closed, there’s a considerable shortage of senior debt to finance new acquisitions and refinance trillions of euros of existing loans that rapidly are maturing and will continue to mature during the next three to five years.

Because there’s plenty of mezzanine debt, the spreads for mezzanine debt have narrowed considerably, reducing the attractiveness of the space. Some creative investment managers have been approaching the problem by offering attractive rates to borrowers on slightly higher loan-to-values than had previously been available to the market, then slicing those senior loans into A and B pieces, holding on the engineered mezzanine debt B-pieces, and selling off the senior lower LTV pieces. One participant even suggested this may be the way in which the CMBS market gets rejuvenated and relaunched in the euro zone. (Regulatory changes have taken the profit out of the traditional bundle-and-sell approach to packaging and selling CMBS in the euro zone, which is why the CMBS market hasn’t regained as much momentum in the euro zone as it has across the pond in the states.)

The bottom line is that, while American investors remain concerned, and while Asia Pacific investors are growing increasingly apprehensive, European institutional investors finally appear to be returning to the markets and once again appear to be willing to rejoin the ranks of major capital providers around the globe.

Not a subscriber to IREI Insights blog? Sign up to receive alerts on new blog posts.

Geoffrey Dohrmann is president and CEO of Institutional Real Estate, Inc.