Tuesday, September 08, 2015

Canadian investors are making big property plays in North Texas

An East Dallas shopping strip that just sold is a small but beloved local landmark.
Matt’s Rancho Martinez restaurant and the Buzz Brews diner keep the place packed.
Maybe that’s why the 65-year-old shopping center was just snapped up by one of Canada’s largest financial institutions.
Sun Life Assurance bought the Skillman Live Oak Center from Texas investor Stone Lake Capital, which fixed up the property.
The retail buy is the latest in a string of local property purchases by investors from north of the border.
Starting in the late 1970s, Canadian real estate firms have had a big impact in Big D.
Canadian developers built a half-dozen of downtown’s office skyscrapers. They developed whole neighborhoods in the suburbs.
In recent months, they’ve ramped up purchases in North Texas, including:
The 13-story Waterway Tower in Las Colinas, a 33-year-old building in Irving, was also acquired by Sun Life Assurance.
3660 Regent Boulevard in Irving, an office campus south of LBJ Freeway, was acquired by Second City Capital Partners of Vancouver. Second City is also part of the group buying the 45-story Ross Tower in downtown.
1700 Pacific, a 49-story downtown skyscraper, was purchased by Montreal-based Olymbec Group.
The Amalfi Stonebriar apartments in Frisco, a 395-unit luxury complex, was purchased by Pure Multi-Family REIT LP of Vancouver.
Running Brook, a 232-unit apartment complex in Arlington, sold to Toronto-based Marlin Spring US Realty, the company’s first acquisition in the area. CBRE arranged the deal.
A Canadian real estate investor, H&R REIT, is also financing the project to convert downtown’s historic Dallas High School into offices for architect Perkins+Will and engineering company WSP.
“The majority of research indicates that Canadian investors make up the largest percentage of international investors in U.S. real estate,” said Andrew Levy, senior managing director of investment banker HFF. “Canadians tend to invest in the U.S. for the same reasons that most international investors do — high-quality asset base, ability to participate in the U.S. economy and diversification outside of their borders where there are also fewer opportunities.
“What is interesting about the Canadian investors, unlike a lot of Asian and European investors, is that they seem to be much more comfortable in nongateway markets like Dallas, and this is not a new phenomenon,” said Levy, referring to coastal cities.
Foreign investors in general are very bullish about America’s real estate markets.
Last year, they poured about $40 billion in direct investment into U.S. property — about 10 percent of the total market.
In the first quarter of 2015, they put in an additional $22 billion, representing about 17 percent of commercial real estate investment in this country, studies show.
Last year, Canadian investors purchased more than 450 U.S. investment properties valued at around $11 billion, according to estimates from commercial real estate firm JLL.
That’s almost four times the volume of China, the No. 2 foreign investor in U.S. real estate.
JLL last year estimated that Dallas was the fifth-most-popular market for foreign buyers, behind New York, Los Angeles, Chicago and Houston.
“Of all of the international buyers circling Dallas, they are the most prolific,” said Jack Crews, managing director in JLL’s Dallas office. “We should see others come, and are, but Canadians are here for sure.”
Steve Brown/Dallas Morning News