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Paulson to Open Second Real Estate Fund After Assets Fall

Billionaire John Paulson is starting another private-equity fund to invest in real estate, marking the second time this month that his money-management firm has revealed plans to raise additional assets.

Paulson & Co., which is based in New York, will seek capital for Paulson Real Estate Fund II LP as well as an offshore affiliate, according to a private-placement notice it filed with the U.S. Securities and Exchange Commission on April 22. The funds haven’t begun taking money from clients, according to the filing.

The investment firm’s assets under management have declined to $18 billion from a peak of about $38 billion in early 2011 after money-losing bets tied to gold, the European sovereign-debt crisis and the U.S. economy. The hedge-fund manager was scheduled to give a presentation today on Paulson Partners Premium LP Fund, described in invitations sent earlier this month as a risk-arbitrage fund for investors “looking to mitigate income taxes.”

Armel Leslie, a Paulson spokesman who works for Walek & Associates in New York, declined to comment on the latest real estate fund filing.

Paulson’s firm, having generated $15 billion of profits in 2007 by betting against subprime mortgage bonds ahead of the housing market collapse, started a real estate recovery fund two years later to buy land from decimated homebuilders. In 2008, the firm began a recovery hedge fund to purchase shares in banks, brokerages and insurance companies beaten down in the global financial crisis.

The initial Paulson property fund, run by Michael Barr, a former managing director at Lehman Brothers Real Estate Partners, bought land from developers that already had the necessary building permits and infrastructure, such as sewers and roads. Paulson Real Estate Recovery Fund also participated in the firm’s $30 million investment during October in William Lyon Homes, a Newport Beach, California-based developer that filed for a $200 million initial public offering on April 9.

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