At one time the New World was a plundering ground for European adventurers. Nowadays foreigners struggle to compete in the fiercely competitive markets. Many real estate investors have arrived with high hopes and retreated with burned fingers, particularly in the last crash.
But there is at least one honourable exception. One of Europe's biggest landlords quietly crossed the Atlantic to assemble a 350m dollar portfolio just over two years ago and has filled its pockets with booty.
The Prudential has no connection with its giant US namesake but shares a similar status in its own back yard. The insurance and pensions giant is one of the biggest investors in UK real estate. But it lives up to its nickname - Prudence - and rarely makes moves into risky areas.
So it came as a shock when the markets discovered plans in the depths of recession to invest up to 10% of the Life Fund in US property. Two years on, the move is being lauded, however, as sales have already yielded profits of more than $140m. This boosted returns on the fund's $7bn portfolio by 1% in the last fiscal year.
There are hints that the exercise in bottom-fishing could be repeated elsewhere. The Prudential has rarely looked outside the UK for real estate, but after the US success, undervalued areas like South-east Asia are now looking tempting.
Nick Thompson, chief property investment officer at Prudential Portfolio Managers, points out that part of the US success hinged on a radical approach to the way professional advisers were paid. In the UK, they are used to percentage fees. La Salle and UK expat Wendy Luscombe, who put together the shopping and office portfolio, had incentives built into their contracts.
'But there were also penalty clauses if income streams did not live up to promises,' says Thompson, who is now considering extending this to other areas of the world.
The Pru had no thoughts about a huge gamble when it crossed the Atlantic. It was simple logic, according to Thompson. 'We were looking for more property, prices were too high in the UK, and the US economy looked promising,' he says.
A crucial factor was the influence of Hugh Jenkins, then in overall charge of Prudential investment. He and Luscombe had made a killing in the Eighties for the Coal Board Pension Fund by getting in and out quickly. He returned from a business trip in 1993 with a suggestion that the time could be right to move in again.
But the Prudential does nothing without intensive investigation. Head of research Paul McNamara spent a year running a rule over markets before allowing any move. Assets were cheap at that time because US funds were out of the market with liquidity problems. The Japanese had burned their fingers badly after pouring in billions.
But there were still strict criteria to meet the Prudential's needs. Firstly, real returns should be 1% above the 6% produced in the UK, merely to justify the extra hassle of buying abroad. Assets also had to be easily liquidated.
'The window of opportunity was relatively small. We bought assets we felt happy holding for five to ten years, but we wanted to be sure we could get out more quickly if necessary,' says McNamara.
That meant sifting out anything but 'pure vanilla' property - straightforward investment which required no massaging, but would gain by floating up on the general tide of recovery.
Apartments and hotels were too radical a departure from normal investment. Industrial wallowed in environmental complications. Booming real estate investment trusts were a major reason why Jenkins had recommended a new look at the US, but the liquidity and pricing was wrong at the time.
That left offices and retail, and these had to be in portfolio chunks rather than individual lots. Intensive research of long-term cycles and local markets narrowed these down to regional malls and offices in specific cities like Atlanta. La Salle trawled the market for possibilities meeting these criteria but Luscombe still rejected 75% before they even reached Thompson's desk.
One major difficulty was the extra margin demanded over domestic competitors. 'Another was that our name meant little. We would lose out in tenders merely because we were an unknown player,' says Thompson.
The time taken on research and careful choice was costly - not least because the market began to move. Thompson aimed to have 10% of the Life Fund property portfolio in the US but had to settle for half that as prices recovered during the selection period.
But the care paid off. 'Since we bought good assets in good markets, these have recovered even more quickly than expected,' says McNamara. And the markets left behind are now among the first showing signs of being overpriced.
A 40% uplift has yielded around $144m profit - and there is a shopping mall in Los Angeles still to go. The capital uplift is still not sufficient to justify selling it, although Thompson is happy to hold on when the income return is around 7%. McNamara is plainly cock-a-hoop. 'Others were too sceptical or not geared up and have missed a trick,' he says.
The original $350m portfolio comprised ten assets split around 70% in offices and the rest in retail. Total sales of $313m have been agreed. They include:
Platinum Tower, a 28,400 sq m (305,000 sq ft) block in Atlanta, Georgia, bought in early 1996 for $32m and just sold to a German Investment company for more than $41m
Lakeside Square, a 36,250 sq m (390,000 sq ft) office block in Dallas sold for $57m
Other properties in Prudential's US portfolio include suburban office buildings at:
1600 Duke Street. Alexandria. Virginia
Fair Oaks Plaza, Fairfax, Virginia
North Creek, Colorado Springs. Colorado
122 West Carpenter Freeway, Los Colinas, Texas
The retail asset is Fashion Square, at Sherman Oaks, California, a two-level enclosed regional mall on a total of 29 acres. The total retail area is 823,000 sq ft with 125 mall stores. These were approximately 90% let when purchased and produced a gross rental income of approximately $16m and a capital value of $140m.
The locational split was:
Mid Atlantic (15%), Mid West (6%), South Central (34% ), Mountain (7%), South East (9%), Pacific (29%)