September 9, 2009
The WSJ is reporting that China’s SWF, China Investment Corporation, is seeking to place bets on the US Real Estate market. To that end, they’ve held discussions with managers BlackRock, Invesco, and others.
The estimates in the article peg allocation in the range of $4-20B, but that is just a drop in the bucket of the amount of troubled debt which looms over the head of office, retail, hospitality, and other real estate assets.
Even if you assume they pick up assets at forty cents on the dollar, that would peg the original valuation at $10-50B, a bit better, but still not a big enough solution.
Ultimately though, what I find most interesting, and comical about the sovereign wealth funds though is who they are selecting to sponsor. They are going after the Morgan Stanleys, BlackRocks, and Tishmans of the world. My question is who are these guys going to be acquiring assets from, themselves?
These are the same groups that failed to see any farther than their fees the last go around and have lost or stand to lose billions from those deals. Go down the list of the biggest CRE money managers, whether its Carlyle, BlackRock, Blackstone, Morgan Stanley, RREEF, Tishman, etc. and look at the deals they’ve done.
Granted, I’m sure they all have funds that have done well in the past, but it’s hard to ignore the decisions that were made over the past several years.
This all reminds me of that old Texas-Tennessee saying:
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