Real Estate Opportunity Funds: A Unique Vehicle for Overseas Investment
Probate & Property Magazine: May/June 2009, Volume 23, Number 3
By Marcia E. Facey
Marcia E. Facey is an assistant general counsel with The Northwestern Mutual Life Insurance Company in Milwaukee, Wisconsin, and the vice-chair of the Real Property Division Life Insurance Company Investments Committee.
As investors seek to diversify their direct equity real estate portfolios, real estate opportunity funds have become an attractive and unique vehicle for investments in domestic and overseas real estate markets. Investors may find, however, that certain property types are difficult to add to a direct equity portfolio, or an investor may lack the development and management skills to enter into a real estate market, especially in a foreign jurisdiction. These challenges and risks are minimized by investing in a fund that is created by a sponsor that has special expertise and a demonstrated track record with the investment strategies that it proposes to execute in a specific market, such as acquiring land and developing retail centers in Mexico, investing in real estate and real estate companies in the United Kingdom, or acquiring, repositioning, and disposing of real estate and real estate-related investments in Japan. This article discusses some of the legal issues involved in these types of transactions.