For thirty years we have tried to drive home the point that you don’t spend equity, only cash, so the cross-collateral pledge requirements of lenders is not the most important issue in commercial real estate development finance.
Now we are seeing a wholesale change that turns this investment practice on its head in a growing tide of money that is likely to quickly reach trillions of dollars. Today, there is a growing trend of foreign investors collateralizing offshore properties to create pools of funds that are then being invested into commercial real estate development securities private placement offers for projects here in the U.S.
This isn’t a fad. This is really arbitrage playing out in the CRE finance capital markets that remain inefficient. Trillions of dollars of investment are in play now, so be sure to get yours.