Private Equity Has Difficult Time Finding Bulk Sales of Low-Cost Homes
The number of low-cost foreclosed homes coming to market has dropped, bulk sales have been slow to materialize and prices are recovering, making it hard for private-equity firms, hedge funds and pension systems to buy as many homes as they need, Bloomberg News reported today. "The folks that raised capital are worried about under-accumulating properties and how to get capital out in an efficient way," said Richard Ford, a managing director in the real estate investment banking group at Jefferies Group Inc. "A lot's being raised. Less than $2 billion of institutional capital has been spent." Investors are trying to spend at least $6.4 billion on single-family rentals, including from funds such as Colony Capital LLC, GTIS Partners, KKR & Co., Oaktree Capital Group LLC, Och-Ziff Capital Management Group LLC and the Alaska Permanent Fund Corp. They want to take advantage of U.S. home prices that are 35 percent below the 2006 peak and growing demand for rentals as the homeownership rate sits at the lowest level since 1997.