Where Does the US Fit in a Changing Global CRE Market?

When Miami-based private equity firm Safe Harbor Equity launched its distressed CRE debt fund earlier this year it had a fundraising goal of $100 million. Then founder Ralph Serrano went on a fundraising tour of Europe and Asia and found a surprising amount of interest from investors. He quickly scaled up the fund to $200 million.

“We received a lot of interest from the people we were speaking to but most felt that they would want to write bigger checks and a $100 million fund wouldn’t accommodate that,” he says.

At first glance, the telling story here would be the enthusiasm expressed in distressed CRE debt—a sign, perhaps, that the industry must brace for a global slowdown in growth. A more significant note to make is Serrano’s international road tour. “Our focus was to seek capital outside of US, because the expectations of foreign investors are much more moderated,” he says. “Foreign investors seem to be very pleased with a low double-digit return or mid-teens return and domestic investors have greater appetite for higher returns.”