Rundown U.S. Homes Draw Aussie Fund on Returns Quest
The first listed Australian landlord of U.S. housing is hunting for rundown properties in the New York City area as prices hit new highs.
The U.S. Masters Residential Property Fund owns A$545 million ($453 million) of singlefamily and multifamily properties in the New York metropolitan area, including in Brooklyn, New Jersey and Harlem, said Alan Dixon, chief executive officer of Sydneybased investment firm Dixon Advisory, which manages the fund. It only buys properties located less than an hour by public transport from Midtown Manhattan, he said.
"New records are being created on a regular basis" in many neighborhoods, Dixon said in an interview in Sydney. "But product that’s still in need of substantial renovation is still quite affordable."
The U.S. subprime crisis that reduced home prices by 34% from a 2006 peak drew investors such as Blackstone Group LP. The New York-based firm purchased foreclosed single-family houses to rent out, and has spent more than $8 billion buying and renovating properties to become the biggest single-family rental-home landlord in the U.S.
Brooklyn and Manhattan are two of the three least affordable housing markets in the U.S., according to RealtyTrac Inc., as prices surge on investor and foreign buyer demand. Rents are climbing as many residents remain unable to buy properties, and banks’ reluctance to fund purchases of fixer-uppers offers institutions a niche that’s inaccessible to individual buyers.
The U.S. Masters Residential Property Fund's shares have jumped 34% since listing in June 2011. The benchmark S&P/ASX 200 index has gained 17.5% during the same period.
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