Sovereign Funds buying REO's.

Discussion in 'Economics' started by IanMacQuaide, Aug 10, 2008.

  1. Incredible.

    Just one sovereign wealth fund has earmarked $29 billion to buy up foreclosed residential real estate.

    This would really shake things up.Everyone is waiting for the banks to be inundated with foreclosures that they have to sell to get a cheap property.It would be hilarious if they just sold them on at a discount to one of these funds in bulk and in cash.
  2. This makes sense.

    At last check they're not making anymore land, and it's a cheap commodity right now.
  3. So far, prices on bulk sales of REO properties vary based on location and are selling from 60 cents to 80 cents on the dollar. Hanson started out offering 40 cents on the dollar for about $2.5 billion worth of California properties owned by IndyMac and Washington Mutual but was turned down. The banks refused to comment.

    Hanson is now willing to pay 50 cents to 60 cents on the dollar for a collection of California REOs worth at least $500 million.

    In fact, this week Hanson's team negotiated a $2 billion package mixed with homes across the country for 31 cents on the dollar. While progress seems slow, Hanson reminds us this is only a nine-month old industry.


    So selling off America is an 'industry' now.

    So banks won't cut homeowners much slack, and American individuals who want to buy homes in foreclosure have to jump through hoops, and wait months to close.

    But they're doing fire sales for foreign wanna-be landlords.

    Nation of debtors, nation of renters. Serfs.
  4. Correct me if I'm wrong - maybe some of you old timers can remember. Didn't Japan try this with commercial real estate in the early 80s?

    That didn't quite work out so well, did it.
  5. Fenrir


    Japan lost money from their real estate assets in Japan, which led to the sale of their assets in the U.S. because they needed the cash. I don't think they lost money in the U.S. though.
  6. Japan's real estate bubble, believe it or not, was much more exagerrated than ours. Ours is a bubble - there's was more like a muchroom cloud...
  7. It's still early yet....
  8. The Japanese lost about 50% on US properties, plus the currency exchange... about 70% overall.
  9. I can see the obvious parallels but fundamentally I think it is different today.

    The Japanese sold because they had to.Had they been able to hold on I'm sure the assets would be worth a lot more today.
    These funds are in for the long term,if prices keep falling they'll just be able to get more for their dollars.They're thinking 20-30 years ahead.Who knows how many hundreds of dollars a barrel of oil will be then?Or how this real estate situation will unfold - but I think they'll be OK being heavily long of both those commodities.
    #10     Aug 11, 2008