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WSJ - Wall Street keys on rentals
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Posted on: 22nd Nov 2013
Some
of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae. The idea is that the new owners would rent out the homes at first rather than reselling - potentially aiding a housing-market recovery by reducing the number of properties clogging the market.
The fact that big-name investors are interested also suggests they anticipate sizable future profits in housing. Currently, banks selling through regular real-estate listings are getting more than 90 cents on the dollar of their asking price, according to industry analysts.
They could be reluctant to unload properties
in bulk if it means selling for much less.
Firms considering bids include Austin, Texas-based broker-dealer Amherst Securities Group and a fund run by mortgage-bond pioneer Lewis Rainer.
Hedge-fund manager Paulson & Co. and private-equity investors Colony Capital LLC are also considering bids, according to people familiar with the process.
The sale consists of 2,500 homes divided into eight regional pools, ranging from 572 properties in
Atlanta to 99 in Chicago.
The total current market value is $320 million, according to an offering document prepared by Credit Suisse, which is advising Fannie.
Bulk sales, however, pose a trade-off. While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs. It is unclear which would be least costly ultimately to taxpayers, who are responsible for the big mortgage-finance company's losses. Purely in dollar terms,
the sale would be small by Wall Street standards.
But it could offer clues about whether investors are willing to pay prices high enough to entice Fannie Mae - along with its sibling Freddie Mac, federal agencies and banks-to do more bulk-sale deals in the future.
By: WSJ.
The fact that big-name investors are interested also suggests they anticipate sizable future profits in housing. Currently, banks selling through regular real-estate listings are getting more than 90 cents on the dollar of their asking price, according to industry analysts.
They could be reluctant to unload properties
in bulk if it means selling for much less.
Firms considering bids include Austin, Texas-based broker-dealer Amherst Securities Group and a fund run by mortgage-bond pioneer Lewis Rainer.
Hedge-fund manager Paulson & Co. and private-equity investors Colony Capital LLC are also considering bids, according to people familiar with the process.
The sale consists of 2,500 homes divided into eight regional pools, ranging from 572 properties in
Atlanta to 99 in Chicago.
The total current market value is $320 million, according to an offering document prepared by Credit Suisse, which is advising Fannie.
Bulk sales, however, pose a trade-off. While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs. It is unclear which would be least costly ultimately to taxpayers, who are responsible for the big mortgage-finance company's losses. Purely in dollar terms,
the sale would be small by Wall Street standards.
But it could offer clues about whether investors are willing to pay prices high enough to entice Fannie Mae - along with its sibling Freddie Mac, federal agencies and banks-to do more bulk-sale deals in the future.
By: WSJ.
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