Middle East Investors Fund Developments in US

From WSJ:

When Related Cos. lost a key investor in a multibillion-dollar residential, retail and hotel project in Los Angeles last year, the U.S. developer looked past U.S. pension funds and instead filled the void with petrodollars: Istithmar World Capital PJSC, a Dubai government-owned investment vehicle, agreed recently to put up $100million.

Such sovereign-wealth funds have shot to public prominence in the U.S. after acquiring stakes to shore up financial firms, such as Citigroup Inc. Increasingly, government-controlled Middle Eastern funds and private Arab investors are becoming partners of convenience, if not choice, for real-estate developers grappling with tight credit and risk aversion among traditional investors such as pension funds.

"There is no question this trend will continue," says Frank Liantonio, executive vice president for global capital markets at real-estate broker Cushman & Wakefield. "We're in an environment where capital structures are strained. Sovereign-wealth funds are perfect candidates for solutions to the problems we're encountering."

Sovereign-wealth fund investment in U.S. property development is still relatively uncommon though it is bound to grow, says Jeff Blau, president of Related. "There is a macroeconomic shift in where wealth resides around the world, and these investors are searching for superior returns" in various assets, he says.

Financial Week has a special edition on Sovereign Wealth Funds here. IDD is holding a free web seminor on Sovereign Wealth Funds on March 26, you can register here.