Our North American Neighbors

U.S. REITs don’t have to go as far as the Pacific Rim or Central Europe to find “overseas” opportunities. Canada and Mexico are more than geopolitical neighbors and NAFTA partners; they’re prime hunting grounds for REITs looking for returns outside this country.

Some noteworthy examples include ProLogis, one of the U.S. REIT world’s main overseas players, which is well represented in both Canada and Mexico. In July 2006, it expanded its Mexican presence significantly by acquiring more than 3.5 million square feet of industrial space for about $238 million.

ProLogis has owned properties in Mexico for nearly 10 years, but this acquisition represented a shift in focus. Previously, the REIT concentrated on border markets to serve as distribution points for goods headed into the U.S. However, the new properties are near Mexico City and Guadalajara, and will be used primarily for distribution within Mexico.

Another major international industrial REIT, AMB Property Corp., is also expanding its presence in Mexico. Earlier this year, with its local partner G. Accion, AMB began construction of two buildings totaling 944,000 square feet in its Tres Rios Industrial Park in Mexico City, and another 474,000-square-foot building in its San Jorge Industrial Park in Guadalajara. Last year, AMB began its first project in Canada when it acquired a site near Toronto to begin development of a million square feet of distribution space.

In the retail realm, Kimco Realty Corporation (NYSE: KIM) owns properties both in Canada and Mexico. Most recently, the REIT formed a joint venture to buy the Village Shopping Centre in St. John’s, Newfoundland, for $20 million. The property is a 474,600-square-foot enclosed mall on about 27 acres in southwest St. John’s. The REIT’s joint venture partner in the deal was Plazacorp Retail Properties Ltd., major Canadian owner of shopping centers in Quebec and the Maritime Provinces.

Even niche REITs are crossing nearby borders in search of investments. Global Signal (NYSE: GSL), one of a handful of companies that specializes in the ownership of cell phone towers and other data transmission facilities, has most of its properties in major U.S. urban areas and along U.S. Interstate highways, but has also been expanding into Canada with essentially the same ownership pattern.