Bloomberg News

Colony Wins Fannie Foreclosure Auction for $176 Million

November 01, 2012

Colony Capital LLC, the investment firm founded by Tom Barrack, won an auction of 970 Fannie Mae foreclosed homes in Arizona, California and Nevada in the largest bulk sale of single-family houses announced to date.

Colony won the auction with a bid of about $176 million, according to a summary of the transactions posted on the website of the Federal Housing Finance Agency. The properties were valued at $156.8 million in a third-party valuation before they were put up for sale in February.

Private-equity funds including Colony, Blackstone Group LP and Waypoint Real Estate Group LLC have disclosed plans to raise more than $8 billion to buy as many as 80,000 single-family homes and put them up for rent. Colony, based in Santa Monica, California, plans to spend about $1.5 billion on such purchases, seeking to take advantage of a housing-market recovery and growing demand for rental homes.

Colony paid $34.1 million to become managing partner of the joint venture with Washington-based Fannie Mae, according to a transaction summary posted by the FHFA. Colony will get the first 20 percent of the rents as a management fee. After that, Fannie Mae will receive 90 percent of revenue until it gets to $136.5 million. Then, Fannie Mae’s share will drop to 50 percent.

The Colony portfolio is among about 2,500 foreclosed homes Fannie Mae put up for auction earlier this year. Pacifica Cos., based in San Diego, purchased 699 houses in Florida, and New York-based Cogsville Group LLC bought 94 properties in Chicago, the FHFA said today. A portfolio of homes in Atlanta didn’t find a buyer.

The U.S. home vacancy rate has been falling as an estimated 1.1 million new households were formed in the third quarter, according to an Oct. 29 Census Bureau report.

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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