Investors warned about paying too much for Class A office space. (Real Finance Estate).At the annual meeting of the Association of Foreign Investors in Real Estate (AFIRE) earlier this month Ray Torto, Ph.D, CRE CRE Commercial Real Estate CRE Corporate Real Estate CRE Commission for Racial Equality (Scotland) CRE CCD (Charge Coupled Device) and Readout Electronics CRE Camp Response Element , principal and managing director, Torto Wheaton Research cautioned foreign investors against paying too much for direct investment in Class A office buildings at this time. "Everyone wants to get into Class A office space, and it's driving up the prices," he said. "At today's interest rates, the cost of capital is 6.6% with mezzanine mez·za·nine n. 1. A partial story between two main stories of a building. 2. The lowest balcony in a theater or the first few rows of that balcony. debt, so an 8-9% cap rate looks good." However, he cautioned that this assumes rising Net Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ). Torto also projected excellent five-year returns for other property types. Full-service hotels (18.31%), limited service hotels (18.21%), retail developments (12.2%), and multi-family housing properties (10.06%) are expected to provide investors with the highest internal rates of return through 2007. In a survey conducted last year, AFIRE members expressed confidence in US real estate as conduit for their investment dollars, saying that 55% of their global real estate assets are in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . In 2001, foreign investors had more than $7 billion in U.S. real estate and projected spending nearly $8 billion in 2002. Collectively, AFIRE members have more than $117 billion dollars invested in US real estate. |
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