Challenges Remain in International CRE Investing

Investing in commercial real estate abroad has not become any easier, according to Jeff Clark, senior vice president, tax, Host Hotels and Resorts, Inc. (NYSE: HST).

Clark moderated a session on tax planning for U.S. REITs and sat down with REIT.com at REITWise 2012: NAREIT's Law, Accounting & Finance Conference in Hollywood, Fla., last month to discuss issues regarding investing outside of the U.S.

When investing overseas, whether in Europe, Asia or South America, Clark said it's important to note that what works in the U.S. doesn't translate into other counties.

"You have to get your arms around the fact that in the U.S., we're a real estate investment trust. We don't pay any federal taxes. When you go to other countries your mindset shifts, you're going to pay taxes," Clark said.

Clark said that Europe tends to be a little easier to invest in because their laws are relatively similar to the U.S. court system. However, he warns that even so, companies can't always apply what they know in one European country to another European country.

"When it comes to different laws in any particular country, even in Europe, laws from one country to the next are not the same. So when you get into those jurisdictions and you think you have got it solved in France, when you go next door to Germany or some other country, it's totally different," Clark said.

A lack of common currency is some countries, such as Asia, makes it much more difficult to navigate real estate transactions. However, he added that the Treasury Department is active in coming up with foreign currency hedging strategies.

Transfer taxes, in addition to income taxes, also should be considered in transactions abroad, especially in Europe.