Big Money Is Buying Up Puerto Rico’s Risky Real Estate
- Investors arrive as residents flee to the mainland in droves
- Those hoping to profit negotiate pitfalls of a unique market
How Did Puerto Rico Go Bankrupt?
Distressed-mortgage investors are descending on troubled Puerto Rico. There are big names among them: Goldman Sachs Group Inc. and Perella Weinberg Partners and TPG Capital. What’s luring them is the opportunity to scoop up home loans and foreclosed properties for pennies on the dollar.
The gambit could certainly work out -- many of the homes, after all, have spectacular views of the Caribbean that could be pitched to well-heeled Americans -- but long-time Puerto Rico investors see trouble ahead. Chief among their concerns: bidding wars are breaking out for the loans at the same time that their quality is deteriorating. It’s a tell-tale sign that the market is getting frothy and that turning a profit could prove tricky on an island where the government is mired in default, the economy has been contracting for a decade and foreclosure is a long and cumbersome process.