Foreign Investors May Have Edge in Buying US Distressed Debt
Real Estate Forum reports: Foreign Investors—institutional players, sovereign wealth funds and high-net-worth individuals—should be aware of the favorable tax treatment they may enjoy when purchasing distressed US real estate debt.
The economic malaise infecting global markets and the Obama Administration’s recent efforts to counter the downturn may give rise to greater investment in distressed US real estate, particularly loans, notes and mezzanine interests. Capitalization rates dropped close historic lows in recent years, aided by plentiful and inexpensive capital markets debt. However, with liquidity issues in the credit markets freezing transactions these days, investors may pursue institutional-quality assets that they refrained from buying under prior frothy market conditions.
Recent estimates by Real Capital Analytics value US distressed property at more than $120 billion with growth potential, based on a total face value for US real estate of $6 trillion, according to the Real Estate Roundtable.
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Posted by: Matthew Stone