Foreign Investment Still Accelerating in Houston

Foreign capital just keeps grabbing market share in Houston, ARA Newmark senior managing directors David Schwarz and Tip Strickland (standing) and executive managing directors Holly Minter and Adam Allen (seated) tell us. The team’s closed $577M in debt and equity transactions in Texas year-to-date (and you’ll recall that Holly, David and Tip didn’t open the debt arm until mid-March) and say at least half of the debt deals involved foreign money. David tells us international investment will continue to increase here, regardless of lower oil prices or a softer economy. Foreign investment doesn’t always follow local trends because those sources often have different reasons to buy. (For example, money may be safer in the US.)

And for those foreign investors primarily driven by yield, even a weakened Houston has far better yield than Europe, the Middle East, and especially the Swiss Treasury (it dipped into negative returns). Tip, David and Holly tell us the overall volume of investors has slowed, with fewer buyers making it to best and final rounds of their deals lately. However, that’s not causing prices to drop or cap rates to rise, and Holly says the best and final bidding is as aggressive as ever. That includes an increase in interest-only offerings—CMBS is offering 10 years interest-only at 70% leverage, and the team has seen that quoted closer to 75%. The ARA Newmark quartet has $544M of exclusive debt and equity assignments in the market.