Investors reap rewards from downturn acquisitions in improving market

September 10, 2012 03:00PM

Companies such as BlackRock, Angelo Gordon & Co and Starwood Capital are beginning to sell off shovel-ready development sites they bought on the cheap when the economic downturn hit, Reuters reported.

These money managers, who purchased cheap plots of residentially zoned land in bankruptcy proceedings from troubled developers, are seeing returns in excess of 20 percent on their investments, thanks to the ever-increasing value of land.

“We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery,” said Michael Barr, a portfolio manager for hedge fund Paulson & Co. “Land is the highest returning component of the home building equation.”

As The Real Deal previously reported, the average price per buildable square foot for Manhattan deals is $323.43 so far in 2012, up from $308.32 last year; in Brooklyn, it’s increased to $117.71 from $113.24 in 2011.

The sites sold by major companies, such as BlackRock, are typically traded with pre-construction and zoning approvals already in place, Reuters said. [Reuters] Katherine Clarke