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Overseas REIT Investment Returning, Analyst Says

04/09/2013 | By Carisa Chappell

Bob O’Brien, partner and vice chairman with Deloitte & Touche LLP, joined REIT.com for a video interview at REITWise 2013: NAREIT’s Law, Accounting and Finance Conference in La Quinta, Calif.

O'Brien discussed the issues and trends surrounding overseas investments.

“Before the downturn in 2008, we saw a number of REITs looking overseas, particularly in emerging markets, really trying to drive growth, and to some extent, diversification,” he said.

While that trend halted in 2008 and 2009, O'Brien said he has started to see REITs look for growth opportunities overseas again.

REITs that invest overseas are faced with some operational complexities, according to O'Brien, who pointed out that there are different business customs as well as laws and regulations overseas.

“It’s really important to have people locally who understand that, and so oftentimes what we’re seeing are REITs forming joint ventures overseas with a local player in that market, rather than try to do it on their own,” he said.

As REIT regimes continue to catch on across the globe, O'Brien discussed his take on REIT formation in other countries.

“I think it’s exciting. I think in the U.S. we saw how valuable access to public capital was in the downturn, coming out of the downturn and even over the past couple of years. So as a way of capitalizing on the real estate industry, it’s been very affective here and in other places where regimes have been in place for a few years. So, we are seeing countries like Ireland and Mexico and Spain now either adopting REIT regimes or having REIT regimes grow rapidly because of the popularity of the concept,” he said.

In terms of countries that could be big game changers globally, O'Brien said Mexico is interesting because the economy's been strong and they have a new REIT regime.

“We see investors increasingly interested in going into Mexico,” he said. “Overseas, China and India both have been challenging. However, some of the other Asian countries, like Vietnam, present some interesting opportunities.”