Where is the Global Capital Flowing Now?

MIAMI—Global capital is still gravitating toward the U.S. We caught up with Jordan Ray, managing director of the debt & equity finance group at Mission Capital Advisors in New York, to get his insights on the opportunities and challenges on the global capital markets scene. Click here to read part one of this interview.

GlobeSt.com: Where are the biggest opportunities in global capital markets as it pertains to money flowing into the U.S.?

Ray: We see strong international capital flows and demand to lend in gateway cities in the U.S. which are as follows: New York, Boston, Washington DC, Chicago, Los Angeles, and San Francisco. As the market continues to recover and strengthen, more and more lenders and investors with enter. Sovereign wealth funds and foreign high net worth individuals will become an increasing part of the conversation.

The world gravitates to U.S. real estate because our lending, contractual, legal, and workout infrastructure is the best in the world for lenders and investors. This continual bent toward U.S. investments will hold rates down for the foreseeable future. People sometimes incorrectly believe that the Fed's quantitative easing is what keeps rates so low. Its actually in large part due to foreign investment in U.S. fixed income products, treasuries, real estate and the like.  

Cash flowing assets in tertiary markets with good demographics and improving microeconomic trends are likely to attract capital as well because CMBS and mortgage REITS are backs and institutional equity may be focused on primary markets. We are also seeing lots of fright condo buyers in South Florida who are willing to write large checks and post deposits of as much as 60% ot 80% of their unit price which allows these projects to be built with non conventional bridge loans.

GlobeSt.com: What challenges remain in global capital markets as it pertains to money flowing into the U.S.?

Ray: We are truly a global business on the capital side, and a local business on the real estate side. Our challenge as advisors is to educate capital sources about markets that they may not be used to investing in. That is something we try to do as much as we can.

For example, we recently were involved in a “bus tour” of Williamsburg, Brooklyn which was sponsored by an association of financial and real estate oriented journalists from Germany. The goal was to educate fund investors in Germany about the growth in outer borough New York so the funds can increase their investments here. It's also a challenge to introduce foreign capital to non-gateway cities in the U.S. It's these transactions where increased yield may be had.