This week Ernst & Young names Howard Roth as its global and Americas real estate industry leader. New York City-based Roth takes the post after serving as Northeast real estate industry leader for a number of years. Roth will now head a global real estate practice that has 5,000 professionals around the world. His charge is to further build the firm’s global practice, replacing Dale Anne Reiss who retired on June 30. His particular initiatives include the development of worldwide infrastructure, sustainability practices and dealing with the credit slowdown. He spoke with GlobeSt.com in advance of his firm making his promotion public.

GlobeSt.com: How does your job change with the promotion?

Roth: I’m very excited to be taking over as a global industry leader and continue to expand a preeminent global brand in the real estate industry. The position changes several things. Now I’m responsible for global business around the world, and primarily it was just New York. But having been in New York has been very positive in the regard with the significant amount that has come into our industry over the past 15 years, primarily through a lot of the New York institutions and private-equity firms. It’s given me a great opportunity to have a great knowledge and relationship with a global network around the world.

GlobeSt.com: What sector do you see getting hit hardest by the current downturn?

Roth: Obviously its no secret that there’s some challenges in the US. What tends to get overlooked are some of the opportunities that exist around the world given what’s happened in our own backyard. I tend not to look at it in terms of sectors. But in the United States there is kind of a de-leveraging happening. The credit markets provided a lot of liquidity over the last several years. Now that we are moving back to more traditional prudence in underwriting, like more hard equity deals and debt levels being less available, part of the question is, how do you bridge that gap? Is it equity from other sources, mezzanine debt or personal guarantees? There are a lot of sectors facing challenges in the US.

GlobeSt.com: Do you see firms doing more workouts as a result of this?

Roth: I do see workouts certainly being an opportunity, and that will occur. One thing that’s a little bit different today from when we traditionally thought of workouts 15 years ago is that there is so much more capital that is available on a worldwide basis that can step in to bridge the gap. In effect, you might be having what in real estate you’d traditionally think of as a workout. But you might see much more of these folks that do have capital, and understand pricing and a deal, moving in and creating a transaction much more quickly than traditionally happened before. Part of that is the rise of private equity and institutionally sponsored funds.

GlobeSt.com: How do you see funding here from sovereign-wealth funds evolving? Will they continue to target trophy assets, or will that change?

Roth: It’s a good possibility that they will get into sectors different from the trophy assets. One of the things that you see when you’re over there, they are becoming more and more like their own private-equity fund. A lot of that is that they are hiring significant amounts of people in the real estate industry. When I’m over there and meeting with these funds, I’m talking to a lot of Americans and Europeans who 15 or 20 years of experience in different aspects of the real estate business. All of a sudden these funds have more skilled capacity and opportunity to better evaluate a wider range of opportunities than they previously had. They used to have tremendous amounts of capital but might have relied primarily on advisers.

The sovereign-wealth funds tend to have a different profile and time horizon and what they are looking at. They tend to have a longer time horizon. They tend to be looking for steadier types of investments, like trophy office properties in major markets. But it’s pretty clear that they are evaluating other opportunities with a long-term perspective. It’s not opportunistic looking to make a quick return.

GlobeSt.com: What kinds of opportunities is your firm seeing from the downturn?

Roth: In the past four or five months I’ve visited many of our cities and clients around the United States. REITs and a wide variety of real estate companies have all absorbed a lot in the past couple of years. They had easy access to credit and bought a lot. Now what they’re saying to me is, “With this credit slowdown, we have a chance to wisely use our time, absorb all of these acquisitions and focus on our operations and be even better prepared to capitalize when liquidity begins to return to the market.”

We’re clearly helping a lot of our clients with operations, technology and cost efficiencies now that they have this chance for a little bit of breathing room.

GlobeSt.com: Are you seeing less US investment in overseas assets?

Roth: It’s pretty clear that real estate is a cyclical business, but we are in a global economy. What happens in one part of the world will now impact other parts of the world. Part of it depends on what types of companies you’re talking about. If you’re talking about investment funds, whether they’re institutionally sponsored or some of the larger private investment funds that have raised billions of dollars in capital, the slowdown will not impact at all. They’re continuing to look overseas and look for opportunities throughout the world. They have the infrastructure in place to do that, their people on the ground and the joint-venture partners to capitalize on those opportunities. That is not going to change.

If you look at construction companies, for them, overseas in many ways might become greater opportunity. Look at the amount of capital that’s going into infrastructure in a lot of the emerging-market countries and the burgeoning middle class.

GlobeSt.com: We’re hearing about lots of mergers right now, like the one between JLL and Staubach and the rumored Colliers-GVA marriage. What’s causing these to take place right now?

Roth: Real estate is a very transaction-oriented business. There are always opportunities for combinations and divestitures. It’s clearly about globalization and the larger and greater the platform gives a greater opportunity to take advantage of whatever your business might be, service, brokerage or otherwise. Globalization causes a consolidation of a wide variety of platforms. And certainly when you have a credit slowdown like we have, it slows down transactions and lots of other things. What tends to happen is you will have stronger players emerging and less stronger struggling, and that creates opportunities for acquisitions.

GlobeSt.com: How do you see this down cycle shaking out?

Roth: This credit slowdown has a bit of a ways to run. You have very high priced oil and other commodities. It’s impacting consumers. You’re likely to see some changes in the regulatory landscape. More and more companies are talking about layoffs, so the trend of unemployment might continue to go up. There is less credit availability. There are so many pieces of uncertainty, to help reach a stabilization point.

What exists now, in simple terms, is to do a deal you need more hard equity. You have stricter underwriting standards and have less debt available. If that continues it’s more change and uncertainty. When do you reach that stabilization point? How does the gap get bridged? We’re still in a period of pretty significant uncertainty. A lot has to flush through the system to get to the point where the credit market starts functioning in a more economically efficient manner.