Global real estate to stay a wild ride: Pralle

By Ilaina Jonas

NEW YORK (Reuters) - For commercial real estate investors, Brazil is a dream and Spain is a nightmare, Michael Pralle, president of real estate private equity firm J.E. Robert Cos, said on Wednesday.

"I'd avoid Spain and Italy right now, and be patient in the United States," Pralle said at the Reuters Global Real Estate Summit in New York. "It's going to get worse before it gets better."

The credit crunch has walloped the U.S. commercial real estate market as borrowing costs soared and lenders have reduced the amounts they will loan. But in developing countries, a dearth of modern office and apartment buildings and shopping centers offers investors lucrative opportunities.

"The U.S. market is pretty tough right now," said Pralle, who was CEO of GE Real Estate, a division of General Electric Co (GE.N), until last year.

Eight months ago he became president and chief operating office of J.E. Robert. The private equity company, one of the world's largest commercial real estate private equity firms, creates funds that invest in real estate in the United States, Europe, Latin American and Russia. It also manages real estate investment trust (REIT) JER Investors Trust JRT.N.

The firm plans to raise $3 billion to $5 billion a year from pension and sovereign wealth funds, endowments and wealthy individuals over the next several years to expand into emerging markets, Pralle said.

About 70 percent of its investments currently are in the United States, but it expects that to drop to 50 percent within three years, he said.

Earlier this week, Pralle attended a meeting organized by real estate tycoon Sam Zell and Wharton professor Peter Linneman. The 50 to 60 attendees included the heads of real estate investment units at Morgan Stanley (MS.N), Blackstone Group LP (BX.N) and Goldman Sachs Group Inc's (GS.N), as well heads of many REITs, Pralle said.