Firms Shift to REITs Abroad
As the U.S. Market Cools

As the U.S. real-estate market cools, more mutual-fund companies are jumping into the hot international property sector, drawn by some fast-growing economies and a shift to U.S.-style real estate investment trusts.

Those fund managers include Goldman Sachs Group, Cohen & Steers Inc. and ING Groep NV. Weakness in the dollar and demand from endowments and pension funds for investments in foreign real estate are helping drive the trend.

Samuel Lieber, manager of the Alpine International Real Estate Equity Fund, says he has noticed the renewed interest from fund managers and others. On conference calls for international companies, where "historically there haven't been any Americans, now all of a sudden, there are Americans all over the place," Mr. Lieber said.

Goldman Sachs Asset Management filed with the Securities and Exchange Commission last week to launch the Goldman Sachs International Real Estate Securities Fund, which will seek growth at a discount by investing in REITs or real-estate operating companies.

The fund will invest a substantial portion of its assets in Japan, the U.K., Australia, Hong Kong, Canada and France. It will have a minimum initial investment of $1,000 for regular accounts, and $250 for retirement accounts. Goldman said it couldn't discuss the fund, because it is still in registration.

Cohen & Steers Capital Management, a subsidiary of Cohen & Steers, of Purchase, N.Y., plans to launch Cohen & Steers Asia Pacific Realty Shares by midsummer. The fund will invest most of its assets in securities of real-estate companies in that region.

In March, the asset manager also registered common shares in a closed-end fund, the Cohen & Steers Asia Pacific Realty Fund, which it will launch depending on market conditions. In addition, the Cohen & Steers International Realty Fund, which was launched last year, now has more than $600 million in assets.

Also, ING Funds, part of ING U.S. Financial Services, launched the ING International Real Estate Fund in March. The fund is sub-advised by ING Clarion Real Estate Securities, a Radnor, Pa., investment-management firm. ING Funds already offers a U.S. real-estate fund and a global real-estate fund, which blends U.S. and international holdings.

REITs are companies that invest in companies that own, manage and operate income-producing real estate. They distribute nearly all of their net income as dividends. The adoption of the U.S.-style REIT structure, which is largely exempt from tax on profits at the corporate level, is stimulating the growth of the public real-estate market.

-- Jennifer Levitz contributed to this article.

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