CHICAGO—The 2015 ICSC RECON event brought around 35,000 retail brokers, developers, tenants and exhibitors to Las Vegas last week to discuss industry trends and make deals. GlobeSt.com spoke with Margaret Caldwell, a managing director in Chicago-based JLL's capital markets group on what was learned and how JLL is advising its clients in the coming year including why retail owners should include international capital JVs in their strategy.
Are there any new, innovative methods for expansion you are advocating right now?
By partnering with an international capital source, a US-based owner can efficiently monetize a portion of their real estate holdings without undertaking a sale. Raising cash to fund acquisitions or exchanging a position in a new partner's holdings are two great ways to grow the portfolio, leverage an existing operating platform, access new markets and diversify risk.
Why else should people in the industry look overseas?
International capital is actively seeking the stability, transparency and depth of the largest retail real estate market in the world. At the same time, US-based owners with ready access to capital are empowered with the ultimate in execution flexibility and the freedom to strategically focus on business, rather than just “paying the bills. Merge the two and you've found the sweet spot. Owners need capital to execute their visions and international firms have the deep pockets to fund them.
Are there other things that international investors want?
Generally, international investors shy away from property management and leasing in the US. They seek strategic alliances that allow them to leverage the local and regional expertise and relationships of best-in-class operators. An owner with an existing operating platform can drive fee income, spread costs across a larger portfolio, exercise a high degree of operational control and adopt best practices. The partnership's interests are aligned.
What do US-based operators need to know before they start out on this path?
Forging a successful marriage of operating and equity partner is complex and time consuming, especially when factoring in cross-border considerations. When a global joint venture is formed, it tends to be large in scale and long term in duration. Due to the up-front investment of time, these investors are relationship-oriented rather than deal-oriented and strive to partner with groups where interests are closely aligned and future opportunities for investment are likely to continue.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
