Wall Street gold rush in foreclosed homes heads north
By Matthew Goldstein and Jennifer Ablan
The state of Alaska is looking to cash in on the growing demand for renting out foreclosed single-family homes.
A spokeswoman for the $40 billion Alaska Permanent Fund recently approved a $400 million investment with a California-based company that specializes in buying foreclosed homes and renting them out. Laura Achee said the fund is still negotiating the terms of the deal with American Homes 4 Rent LLC.
The Alaska fund, which is managed by a state-owned corporation, is believed to be one of the first public investment arms to sink money into the market for foreclosed homes.
Representatives for American Homes 4 Rent, which is affiliated with Malibu Management of California, didn’t return requests for comment. News of the Alaska deal was first reported by the Juneau Empire.
Back in March, we reported that institutional money was beginning to circle the market for foreclosed homes in the hopes of building a new asset class in single-family homes. We called it a new “Wall Street gold rush” and since then the interest only appears to have grown.
Asset management firm TCW is launching a $250 million fund to invest in foreclosed homes. And just last week we reported that Oliver Chang, who had been Morgan Stanley’s head of U.S. housing strategy, was leaving the investment firm to start a firm that will invest in homes in distress and/or foreclosure.
Also, Bank of America recently finalized a plan to sell 550 single family homes it has taken title to a group of firms looking to build a portfolio of foreclosed homes. Some of the more notable buyers of homes in that BofA bulk sale were Carrington Capital Management, Starwood Capital and Two Harbors Investment Corp. Representatives for the banks and the buyers declined to comment.
And, of course, the wait still goes on for the Federal Housing Finance Agency to announce the winning bids for a bulk sale 0f 2,500 Fannie Mae-owned homes. Sources say bid documents for that bulk sale recently went out to potential buyers and the expectation is bids that bids will be submitted to Fannie and the FHFA by mid-June.
But of all this activity, the Alaska deal may be the most intriguing because if public pensions become believers in the foreclosed home market, it could open the floodgates to a whole new source of dollars for private equity firms and hedge fund looking at the space.
If that were to happen, this burgeoning new asset class could really take off.