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WSJ: Australia Searches for Gold In U.S. Commercial Real Estate

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WSJ: Australia Searches for Gold In U.S. Commercial Real Estate
Australia Searches for Gold In U.S. Commercial Real Estate

By CHRISTINE HAUGHNEY
Staff Reporter of THE WALL STREET JOURNAL
August 22, 2005; Page C1

Australian pension funds are snapping up U.S. commercial real estate, adding heat to a steamy market.

In the past 12 months, Australians have purchased $6.8 billion of American office buildings, shopping centers and other commercial properties, according to Real Capital Analytics. During that period, Australians accounted for 37% of the international capital that poured into U.S. real estate, the New York research firm says.

Australians topped German investors, the biggest foreign investors in U.S. real estate lately, who invested $3.5 billion over the same period, according to Real Capital. The rest of Europe combined ranked third with $2.8 billion in deals. And for the first time in its 17-year history, the Association of Foreign Investors in Real Estate, a trade group based in Washington, next year will be run by an Australian, who is taking over from a German investment executive.

(snip)

Australians appear undaunted by high prices in the U.S. real-estate market. "I know current U.S. investors that wouldn't touch these things at the prices that were paid," says Bill Starn, a partner in PricewaterhouseCoopers's national real-estate group, who has audited some Australian investment firms. Still, he said the deals met the parameters that Australian investors set for themselves.

Part of the confidence stems from a strong currency. The Australian dollar is up 10% from its recent low on June 17, 2004, against its U.S. counterpart. A stronger Australian dollar makes assets denominated in U.S. currency cheaper.

(snip)

Write to Christine Haughney at christine.haughney@wsj.com

URL for this article:
http://online.wsj.com/article/0,,SB112465578618318980,00.html

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