Justin Wheeler, who was named chief executive officer last week of the commercial-mortgage business owned by Berkshire Hathaway Inc. and Leucadia National Corp., said global investors are increasingly betting on U.S. property.
"People just want to pump dollars into the U.S." amid volatility in other markets, he said in a phone interview Tuesday afternoon New York time. Commercial real estate is a "hot space right now."
Wheeler's Berkadia Commercial Mortgage LLC originates and brokers loans, some of which are sold to U.S. government agencies. The company is also among the largest servicers of commercial real estate debt. Berkshire and Leucadia formed the company in 2009 after buying a business from bankrupt Capmark Financial Group Inc.
U.S. commercial property values surpassed the November 2007 peak by 2.4 percent, as measured by the Moody's/RCA Commercial Property Price Index. Prices in major markets, which include cities like New York and San Francisco, have exceeded prior records by about 16 percent, Moody's said this month in a report.
Markets have been rattled by plunging oil prices and central-bank moves like last week's decision by the Swiss National Bank to abolish a currency ceiling. That's driven investors to the U.S. even as its economy is still rebounding.
Chinese insurance companies are flooding into the global market for prime commercial real estate, helping to drive up property values. And Blackstone Group LP agreed to buy 36 apartment properties across the country for about $1.7 billion, two people with knowledge of the deal said this week.
The U.S. is the "tallest building in Idaho," Wheeler said, referring to one of the least-densely populated states.
Berkadia has expanded in recent years through acquisitions. In May, it bought Keystone Commercial Capital, a mortgage- banking company. In 2013, it purchased Hendricks & Partners, a firm that advises clients on multifamily real estate.
Wheeler, who used to work on mergers and acquisitions for Leucadia and has been acting CEO of Berkadia since April, said there will be more chances for Berkadia to buy businesses. The company's owners have the resources and long-term focus to do bigger deals when opportunities arise, he said. Berkshire is run by billionaire Warren Buffett and Leucadia by CEO Richard Handler.
"It's rare to be part of an organization that thinks in decades, not months and quarters," Wheeler said. "That's a real competitive advantage for us."
