NORTH AMERICA - The Alaska Permanent Fund Corporation has given final approval to a $400m (€316m) commitment to a strategy that will purchase foreclosed homes and manage the assets as rental properties.
The investment will be combined with a $100m investment from the pension fund's managing partner in the strategy, America Homes 4 Rent, based in California.
Michael Burns, executive director at Alaska Permanent, said: "It's a compelling investment strategy. On the institutional side, there is other capital that is planning on putting out capital in this sector. We are ahead of this other capital because we have an operating partner working with us and some of this other capital does not."
America Homes 4 Rent already has 1,000 homes under its ownership at this time.
The ownership of the houses acquired with America Homes 4 Rent will be split along the same lines as the equity contributions made by the pension fund and its operating partner.
Alaska is being represented in this strategy by its real estate manager, CS Capital Management.
For right now, Alaska is not planning on putting any leverage on the $500m of equity put into the strategy, but this could change once the portfolio starts to get assembled.
The pension fund is thinking that the assets will be able to produce a 6% cash-on-cash return.
Alaska and America Homes 4 Rent will be buying single-family homes at auctions.
The long-term idea is to acquire the homes, make improvements and then sell them at some point in the future.
"The actual time-frame for doing this is not set at this time," Burns said. "Much of it will depend on how the overall economy does. A holding period on this type of investment might be 5-7 years."
Alaska will be looking to buy occupied and un-occupied homes.
The investments will be made on houses in a variety of markets around the US, including Southern California, Las Vegas, Arizona, Austin, Dallas, Atlanta and Jacksonville.