Housing "Recovery" Endgame Escalates -- By Tyler Durden, Zero Hedge

Och-Ziff were perhaps a little early but used the last 10 months to unwind their real estate and exit the landlord business as the hedge-fund sponsored echo-bubble in housing rolled over into the mainstream. "American-Homes-4-Rent"'s IPO suggested a scramble to exit. With 60% of home purchases now being cash-only (explains the ongoing and massive layoffs in the mortgage business not just due to rate-driven weakening of demand), it is therefore a concern when one of the biggest funds playing in this space - OakTree Capital - announces plan to exit the buy-to-rent trade - selling roughly 500 fully-leased homes. As Reuters notes, it is yet another indication that early investors are looking to cash-out on the "recovery" in U.S. housing prices.

Via Reuters,

Oaktree, which manages about $76 billion, and its partner Carrington Mortgage Services are entertaining bids for the portfolio of fully-leased homes as they seek to exit from the buy-to-rent trade that has become popular the past two years with hedge funds and private equity firms.

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Oaktree, which specializes in distressed investing, and Carrington had initially planned on converting their portfolio into a real estate investment trust. But investors have now decided to simply exit the trade. Their asking price for the portfolio could not be learned.

Earlier this year, Reuters first reported that Oaktree, after partnering with Carrington in early 2012, was souring on the buy-to-rent trade after seeing returns on rents from single-family homes begin to compress.

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There has been a transformation in the U.S. buy-to-rent trade over the past year, which initially began with a number of small hedge fund and speculators buying the wreckage of the housing bust in southern California, Florida, Arizona and Nevada.

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Fueled in part by the Federal Reserve's policies, which made it easy to borrow money to buy distressed real estate, the buying spree led investors to become more aggressive in seeking higher-yielding assets.

To date, Blackstone is the single-largest buyer of foreclosed homes, owning about 32,000 in a dozen states. Other big acquirers are: American Homes for Rent, Colony Capital and Silver Bay Realty Trust Corp.

American Homes, Silver Bay and a few other institutional buyers of foreclosed homes have tried to monetize their investment by converting their home portfolios into publicly traded real estate investment trust.

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