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When is a deal more than a deal? When it marks the growth of a major trend. The deal here is London-based Strategic Real Estate Advisors taking over management and leasing chores on a 22-asset portfolio in the Southeastern US, a story GlobeSt.com broke in mid-September. The trend is the globalization of private capital, and StratReal founder, chairman and chief executive says that in coming years we’re going to see the emergence of a truly global market, where capital flow, not only institutional but family-based as well, will be flowing in both directions across the pond. StratReal, of course, has specialized in providing investments for private family foundations and trusts, one of which owns the Southeastern portfolio. Rolin oversees a company that boasts some $5.5 billion of class A CBD office space. From his London perch, he says, he sees the changing global investment dynamic much differently than any Yankee can. Let him explain:

GlobeSt.com: Where is your portfolio of assets located?

Rolin: England; Western, Middle and Central Europe; as well as the US, Shanghai and Canada. This newest assignment, which delivers 3.1 million sf, brings our total US portfolio to 6.4 million feet. So it’s a major step forward in our US footprint.

GlobeSt.com: How do you handle leasing and management from such a distance?Rolin: Since I formed the company in 1998, we’ve taken an open-architecture approach, hiring outsourced companies, the best of breed, to handle the assignment for us. On this transaction, we interviewed about 25 companies, property managers, leasing agents, to do different chores. We’ve picked a team composed of a dozen companies that report to us.

GlobeSt.com: Tell me about what this portfolio means in terms of the global shift in capital.

Rolin: First of all, I’m based in London, so I have a more international view than someone based in the US. There has been a sea change of global real estate investment over the past five to 10 years, and it will completely revolutionize the real estate asset class for private capital. Investing from Hungary to Portugal used to be a very big deal. But European currency was unified in 2000 and now that currency is 25% to 30% more powerful than the US dollar. So you’ve got economies that are more robust, and property markets that have skyrocketed, much more so than in the US. Spain alone has grown 400% in 15 years, just to give you an idea of how slow America is compared to these smaller economies.

GlobeSt.com: But that’s misleading in the sense that countries like Spain had so much catching-up to do.

Rolin: European real estate prices are much higher than American. London is 2000 pounds a foot on Bond Street, so “catch-up” is an unfair characterization.

GlobeSt.com: Frankly, I was referring not so much to the UK as to those countries not previously considered world players.Rolin: And you’re correct, but even those countries have played catch-up very fast. They’re starting to find more cross-border, European capital. Private Irish investors, who have been buying prime London assets in massive amounts, are also buying in Paris and Madrid. They own the whole south of Spain already. And now they’re not only starting to buy cross-border within the Euro zone but they’re coming across the pond, because the yields on Dublin buildings are lower than on Atlanta buildings. First-time private investors–Spanish, Irish, French families, who couldn’t even legally invest in America 15 years ago–are buying in the US. It’s unheard of. They’re doing what the Germans or Swiss did 15 years ago, and we’re talking big money.

GlobeSt.com: So the global economy is at last coming to full flower?

Rolin: Correct. You’re starting to get people who are scouring the globe for alternative investments, including real estate, as part of their wealth preservation. That’s something Americans never had to do because it was the fastest growing economy. But, of course, as property prices come up in the US, American investors are starting to scour the world too, but you’re not seeing Americans buying anything privately around the world.

GlobeSt.com: Which should change as European and Asian REITs take hold, no?

Rolin: You’re correct. Everyone will be investing in brick and mortar through the same entities.

GlobeSt.com: So what is the next step for StratReal?

Rolin: We’re focusing on the third wave. To date, US families have invested mostly in opportunistic funds and fund managers like Blackstone or Morgan Stanley. That was the first wave, and it’s been a big success. Blackstone has bought a lot of private capital into Europe and Asia. The second wave has been buying European property shares. The third wave is big families taking direct investment positions overseas with other local families or investors. To that end, we’ve started discussions with a number of American family trusts and foundations that are in line with our European customer base. They’re starting to look seriously at taking their capital into foreign investment markets. Wealthy private American investors will go to Europe, just as the Europeans have come to America. It’s just a matter of time as cap rates in America keep compressing.

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