Goldman Sachs exec to set up residential real estate fund
Perhaps this is yet another sign that the nadir has been reached in the residential real estate market: More funds are being created to snap up value-priced real estate, in hopes of renting units and then selling the units at a hefty mark-up.
More validation of this market comes from former Goldman Sachs executive Donald Mullen, who Reuters reports is trying to raise at least $500 million for just such a fund. Until January Mullen was head of the credit and mortgage business within Goldman's securities division; he is considered one of the in-house architects of various derivatives that allowed clients to bet against the housing market. He's now going long and apparently just began marketing his Fundamental REO Access fund. He will serve as the fund's placement agent.
The field is certainly growing crowded. A host of new private equity real estate companies are setting up similar funds. Waypoint stands as a good example. Pensions seem to be on board with this at the limited partner level. Columbia University and CalPERS are among those who have already invested in such funds. If anything, one could argue that Mullen is a little late to the game.
At some point, you have to wonder if there will be enough supply for this business to work. Prices will likely begin to creep up soon. And the bargains may quickly evaporate, before all the dry powder can be put to work. Down the line, I wouldn't be shocked if some money was actually returned to investors.
- here's the article