Cerberus Capital Management next to buy 4.200 houses

Cerberus Capital Management L.P. a giant in the private equity and real estate is going to buy more than 4.200 houses in the US, mainly in the Mid West area, including Chicago. The aim is to rent these houses later to people. So far, we haven’t seen such a buying operation in the real estate sector. According to analysts this is the major operation on its kind in the history of the States.

Cerberus manage more than $25 Billion and the company is specialized in purchases in four main sectors:

  • Distressed Securities
  • Private Equity
  • Real Estate
  • Middle Market Lending

This same year Cerberus Capital Management acquired other 1.500 houses through the takeover of  Five Ten Capital. Now the company is one of the major house owners. The real estate sector has become very interesting in US, after the deep drop of house prices in years 2007-2012. Starting from 2012 the average house prices in the Us are up by around 25%. However prices are still 30% lower than the peak of 2007. Exceptions are cities like New York and San Francisco where prices are already higher than the 2007 levels.

Can common people benefit from this return of interest in the real estate sector. Certainly they can. For as long as the FED will continue to keep the interest rates at these levels, buying houses in the US, will be a perfect investment for young families and real estate funds. The only question remain how much can prices go up from these levels and will they reach again the 2007 peak? Analysts do not agree about targets and the time it would take to top again 2007 prices.

We believe that valuations are pretty high at the moment respect to the historic mean and to the average salaries. The baby boom wave has already passed and we expect pricing pressure to come from immigration and the real estate companies. Probably, the excess money that inflows in these funds from the wealthiest part of the country, can find a huge opportunity in the sector, above all if we consider the fact that interest rates will continue to remain low for long time. Our vision for the next future is mildly positive for the sector. Prices will continue to go up but at a slower pace.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *