The unprecedented flow of US capital into European property is set to continue for the next 12 months at least, according to David Simon, CEO of the US retail real estate giant Simon Property Group.
Speaking during an interview at the annual ICSC conference in Milan on Monday, Simon said he anticipated that more capital would flow into continental Europe in particular. 'I think that given where credit markets are today and that the spread between property yields and sovereign debt is still relatively attractive, I think we’ll see the cycle of capital continue.’
Simon said that in terms of capital flows, we are now 'probably halfway through the innings'. 'Some [US] opportunistic funds are exiting the market because they got in early, but there's still a tonne of money out there. People are always looking for deals and there's plenty of capital out there for smart deals.'
He added, however, that this may not be the case a year from now. 'There's more risk here and the financial system is a little bit more opaque [than in the US]...We invested in Klépierre in 2012 and took some risk in terms of the euro.'
Indianapolis-based Simon Group owns a 20% stake in French retail property REIT Klépierre. It also owns a stake in UK-based outlet centre operator McArthurglen.
