Gary Garrabrant and Sam Zell

The co-founder and former CEO of Sam Zell‘s real estate investment trust has a new private-equity and consulting firm, the Wall Street Journal reported.

Gary Garrabrant, who left Zell’s Equity International in September, is now heading Jaguar Partners. The business will invest in emerging-market companies in such industries as consumer finance, retail and health care. [more]

Florida’s Palm Beach

Weary of New York’s exorbitant city and state tax rates, a large number of Wall Street hedge funds and private equity firms are making an exodus to Florida’s Palm Beach County, the New York Post reported. “Florida is a state of choice,” Thalius Hecksher, global development chief for Apex Fund Services, a hedge fund that recently moved a bulk of its operations to Palm Beach, told the Post.“It’s organically grown. There’s no need to drag people down here. It’s a zero-income-tax jurisdiction.”… [more]

From left: 735 Bryant Avenue, Thomas Capasse, a principal with Waterfall Asset Management and 852 East 213 Street

Private equity firms such as Stabilis Capital Management, Madison Realty Capital and Onex Real Estate Partners have been buying debt on small, often severely distressed rental properties in secondary neighborhoods in New York City with little fanfare over the past year. The acquisitions resemble activity during the height of the market when private equity firms, often in partnership with local operators, purchased large portfolios of rent-regulated apartment buildings. Yet this post-boom trend is different in two significant ways: The properties are much smaller, and the buyers are seeking to gain control of them by buying the debt, instead of directly buying the buildings. [more]

The guidelines for the conversion of real estate owned homes into rental properties were released by the Federal Reserve last week, the Los Angeles Times reported. The central bank decreed that lenders could receive Community Reinvestment Act credit under the new policy. The Community Reinvestment Act, enacted in 1977, was intended to encourage lenders to provide housing to low- and moderate-income people. [more]

Colin Weil, co-founder of Waypoint Capital

Increasingly private equity firms are snapping up single-family and multi-family proeprties that have been foreclosed on across the nation, Bloomberg News reported.

For instance, Waypoint Capital, a firm based in Oakland, Calif. has $150 million in assets and is buying, on average, five more homes per day at auction. And Waypoint is able to offer 8 to 9 percent returns to investors, the firm told Bloomberg. [more]

From the January issue: For years, private equity firms have been lavished with huge sums of money by investors looking to own New York buildings. But recently, there have been fewer deals that those firms are finding attractive — ones that offer quick and bountiful yields. Plus, many so-called distressed opportunities that were supposed to materialize didn’t, as banks worked out new loan terms with their struggling borrowers.

As a result, many private equity firms’ buckets of cash have been sitting unspent. And, under typical investment rules, funds that are not deployed within three years must be returned to investors, without a hotel or condo or office tower to show for them. [more]

Morgan Stanley has been getting nibbles from multiple U.S. private equity firms looking to take on a stake in the bank’s beleaguered real estate funds management business, sources told the Financial Times. Among those who are interested: KKR and TPG, both of which currently have little in the way of property operations, and Colony Capital, which yesterday handed over its stalled, $2 billion Xanadu complex in New Jersey’s the Meadowlands to creditors. Despite the number of suitors lining up for a share, each has proposed only a relatively small investment in the $8.8 billion fund, which is not expected to return much in the way of fees or profits, the paper reported. Morgan Stanley, which may need to cut its stakes in real estate investments anyway in order to comply with the Volcker rule, said it has not made any decisions so far. [Financial Times via CNBC]

… [more]

Real estate executives say there is anecdotal evidence that private
equity investors are returning to the commercial market. Robert Knakal,
chairman of Massey Knakal Realty Services, said more than 200 people
have requested information about a note underwriting the Warehouse 11
residential development in Williamsburg he is marketing. “A number of
those are people who have been relatively inactive for the past year or
two who are starting to look again,” Knakal said. The city’s big real
estate families, including the Dursts, LeFraks and Resnicks, are
rumored to be looking to expand. Richard LeFrak, president and CEO of
the LeFrak Organization, told the Observer that he is starting to look
at properties. “Would I buy something? Yes, I would. Am I prepared to
put up substantial equity? Yes, we are. When prices got very high, did
I think people weren’t thinking clearly? Yes, I did,” LeFrak said,
adding that there are still obstacles in buying properties, including
the lack of credit and not knowing what prices are since there are so
few transactions…. [more]