Oaktree Capital Management LP (OAKTRZ) said it agreed to fund the purchase of $450 million of single-family foreclosed homes that Carrington Holding Co., a real estate services firm, plans to manage as rentals.
Carrington manages more than 3,000 rental homes for mortgage company Fannie Mae (FNMA), which were acquired through foreclosure, and has developed a national network to monitor and manage the properties, the Santa Ana, California-based company said today in a statement.
“Reducing the number of distressed properties for sale can help stabilize home prices, and putting families into currently vacant homes can begin the healing process for neighborhoods that have been damaged by foreclosures,” Carrington Chief Executive Officer Bruce Rose said in the statement.
Oaktree, a Los Angeles-based investment firm with $73 billion of assets under management, is one of a growing number of financial firms betting they can profit on the real estate collapse by acquiring discounted houses in bulk and renting them to tenants who lost their homes or aren’t ready to buy.
About 6 million homes with a current market value of $750 billion will be repossessed by banks or sold at distressed prices by 2016, according to a December report by Oliver Chang, a San Francisco-based analyst with Morgan Stanley.
Mortgage companies controlled by the U.S. government -- the Federal Housing Administration, Fannie Mae and Freddie Mac (FMCC) -- received more than 4,000 proposals in September in response to requests for ideas to dispose of the more than 200,000 homes they acquired through foreclosure. The first transactions under the plan will take place “early” this year, Corinne Russell, a spokeswoman for the Federal Housing Finance Agency, said in an e-mail today.
‘Unique Investment Opportunity’
“We believe that this is not only a unique investment opportunity with few qualified large-scale competitors, but one that also has the potential to have a broader positive effect on the housing market and the overall economy,” John Brady, Oaktree’s head of global real estate, said in today’s statement.
The Carrington-Oaktree deal follows an agreement between Waypoint Real Estate Group, an Oakland, California-based company that acquires and manages houses with distressed debt, and GI Partners, an investment firm in Menlo Park, California, to buy more than $1 billion worth of single-family homes to rent out. That partnership was announced Jan. 11.
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