Private Equity Has Too Much Money To Spend On Homes

Ronda Churchill/Bloomberg

Bloomberg News – By John Gittelsohn – June 13, 2012

Funds planning to invest more than $6 billion to buy and rent foreclosed homes are finding it easy to raise money. The difficulty is spending it.

The number of low-cost foreclosed homes coming to market has dropped, bulk sales have been slow to materialize and prices are recovering in markets such as Phoenix, making it hard for private-equity firms, hedge funds and pension systems to buy as many homes as they need.

“The folks that raised capital are worried about under-accumulating properties and how to get capital out in an efficient way,” Richard Ford, a managing director in the real estate investment banking group at Jefferies Group Inc., said in a telephone interview. “A lot’s being raised. Less than $2 billion of institutional capital has been spent.”

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