Matthew Schwab, Karlin Real Estate

Karlin Real Estate is an affiliate of Karlin Asset Management, a Los Angeles-based private investment firm with more than $1.5 billion of unleveraged capital under management. Last month, Institutional Investor recognized Karlin Asset Management as Family Office of the Year. Matthew Schwab, Co-founder and Managing Director, gives Europe Real Estate his opinion on the real estate market in Europe and the US.

Tell us a little bit about Karlin Real Estate.

We founded Karlin Real Estate in 2009 because we saw the opportunities to fill a liquidity gap that we see in Europe now. Since that time we have acquired and financed more than 5 million ft² of commercial, retail, industrial, and multi-family properties across the United States through both a debt and equity platform. We are also undertaking our first development project, a 300-acre master planned technology and office park in Austin, TX which is one of the hottest real estate markets in the U.S.

You have recently made your first acquisition in Europe. How does the US market differ from the European market?

There are probably more similarities than there are differences. One of the biggest differences between the markets today is that in the US, investors are taking advantage of the bounce off the bottom and we are once again seeing prices beginning to approach pre-recession levels, especially for core properties in primary markets such as Los Angeles and New York. We are definitely not there yet in Europe, but we feel that the window to acquire assets at interesting prices will only be open for a short period of time.

How do you see these two markets evolve in the future?

Both markets will continue to improve. To borrow an American baseball euphemism, they are at different innings of the same game. The US property markets are probably near the seventh inning, while Europe is just beginning to get up to bat for the first time. The knowledge that we are no longer on the precipice of financial collapse has helped lenders on both sides of the Atlantic deal more effectively with their balance sheet issues and that’s good for commercial real estate.

Why is the UK interesting to you and which other European markets/sectors will you focus on?

There are definite signs that the UK economy is improving; this of course will have a positive impact on commercial real estate, especially in and around London. According to reports, the UK’s GDP in the second quarter grew twice as much as the previous quarter and we are seeing positive reports on retail spending and manufacturing. Like our approach in the US, we will look at all property types including office, retail, industrial and multi-family throughout Europe. It is important to note that we don’t buy in a particular market and we look at individual investments on a case-by-case basis. While primary markets such as London are obvious targets, we will look at all opportunities, including those in secondary markets such as Dublin and Madrid.

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