Cross-Border CRE Finance: Structuring Transatlantic Deals in 2026
Cross-border commercial real estate investment between the US and UK has reached its highest levels since 2019. As capital flows accelerate in both directions, understanding the nuances of transatlantic deal structuring has become essential for sophisticated investors.
The Cross-Border Opportunity
US Capital into the UK
American institutional investors are increasingly attracted to the UK market for several reasons:
Yield Premium: UK commercial property yields remain 50-100 bps above comparable US assetsCurrency Opportunity: Sterling's relative position creates potential upside for dollar-based investorsMarket Transparency: The UK offers one of the world's most transparent real estate marketsLegal Framework: English law provides strong creditor protectionsUK Capital into the US
Conversely, UK and European investors continue to allocate to US markets:
Market Depth: The US offers unmatched liquidity and deal flowDiversification: Geographic and sector diversification benefitsScale: Ability to deploy larger ticket sizes in primary US marketsGrowth Markets: Sunbelt and secondary US markets offering superior growth profilesKey Structuring Considerations
Currency Risk Management
One of the most critical aspects of cross-border CRE finance is managing currency exposure:
Natural Hedging: Borrowing in the local currency of the asset to create a natural hedgeForward Contracts: Locking in exchange rates for known cash flowsOptions Strategies: Providing downside protection while maintaining upside participationCost Considerations: Hedging costs vary significantly and must be factored into underwritingFinancing Structures
#### US Assets with UK Sponsors
US Bank Financing: Most competitive for sponsors with US track recordsCMBS: Available for qualifying assets regardless of sponsor domicileAgency Lending: Requires US entity structure for multifamily assetsCross-Border Facilities: Select international banks offer multi-currency platforms#### UK Assets with US Sponsors
UK Clearing Banks: Barclays, NatWest, HSBC, and Lloyds are the primary senior lendersInternational Banks: Deutsche Bank, BNP Paribas, and others active in UK CREInsurance Companies: Aviva, Legal & General, and others for long-term fixed rateDebt Funds: Growing presence for higher-leverage and transitional situationsTax Structuring
Efficient tax structuring is essential for cross-border investors:
US-UK Tax Treaty: Provides relief from double taxation on real estate incomeEntity Selection: SPV structures, REITs, and partnership vehicles each have implicationsWithholding Tax: Understanding and minimizing withholding on cross-border paymentsExit Planning: Structuring to optimize tax efficiency on dispositionRegulatory Considerations
FIRPTA (US): Foreign Investment in Real Property Tax Act implications for non-US investorsUK AIFMD: Alternative Investment Fund Managers Directive complianceAnti-Money Laundering: Enhanced KYC/AML requirements for cross-border transactionsSanctions Screening: Increasingly rigorous compliance requirementsCase Study: Transatlantic Multifamily Portfolio
A recent BSA engagement illustrates the complexity and opportunity of cross-border execution:
Situation: A UK-based institutional investor sought to acquire a $200M multifamily portfolio across three US Sunbelt markets.
Challenges:
Sponsor had limited US lending relationshipsCurrency hedging costs needed to be managedUS entity structure required for agency financing eligibilitySolution:
Established US SPV structure to access agency lendingSecured Fannie Mae financing at 5.45% fixed for 10 yearsImplemented rolling FX hedging program to manage GBP/USD exposureAchieved 75% LTV with interest-only periodResult: All-in cost of capital approximately 150 bps below what was available through UK-based lenders financing US assets.
BSA's Cross-Border Platform
With offices in both New York and London, Barrow Street Advisors offers unique advantages for cross-border transactions:
Dual-Market Relationships: Direct access to lenders in both marketsLocal Expertise: On-the-ground knowledge of market practices and conventionsRegulatory Navigation: Experience with both US and UK regulatory frameworksExecution Track Record: Proven ability to close complex cross-border transactions
To discuss cross-border financing opportunities, contact our team.