Private equity giants giving bridge loans to home flippers

Small-time business is one of the last fragmented lending sectors

TRD NEW YORK /
May.May 08, 2015 10:00 AM

Wall Street is deepening its investment in the housing sector, with an increasing number of major institutional investors now providing bridge loans to small-scale home flippers.

Colony Capital, Cerberus Capital and Blackstone Group are among the firms that have started making the loans to investors who buy homes and quickly sell them for a profit, a practice that is benefiting from rising prices, a shortage of inventory and limited new construction, according to Bloomberg News.

“It’s one of the few highly fragmented businesses left,” said Beth O’Brien, CEO of Colony’s lending business. “If someone can do it nationally at scale, it’s cheaper and better for the borrower.”

Bridge loans, which are backed by the real estate, give investors cash for home purchases and renovations with about a year to repay.

Blackstone plans to make $1 billion of these types of loans per year. [Bloomberg News] — Tess Hofmann


Related Articles

arrow_forward_ios
Clockwise from bottom left: 62-60 99th Street in Rego Park, 850-870 Third Avenue in Sunset Park and Square Mile Capital’s Craig Solomon with renderings of 550 Clinton Avenue in Brooklyn (Credit: Google Maps; Getty Images; Morris Adjmi Architects)

These were the top outer borough loans last month

Blackstone's Jonathan Gray, Gaedeke Group's Sabine Gaedeke Stener and 44 Wall Street (Credit: Stener by Gaedeke Group; Gray by Drew Angerer/Getty Images, 44 Wall Street via Google Maps)

Blackstone sells office tower at 44 Wall Street for $200M

Brookfield Property Group’s Brian Kingston, Blackstone Group's Jonathan Gray and 1 Liberty Plaza (Credit: Google Maps)

Brookfield, Blackstone consider One Liberty Plaza sale

Liberty View Plaza at 850 3rd Avenue and Marvin Schein (inset) (Photo by Axel Dupeux)

City lets Salmar bring office tenants to Brooklyn industrial property

Brookfield's largest-ever $15B property fund has invested in properties from New York (666 Fifth Avenue) to Bangalore (the Leela Palace hotel) (Credit: Brookfield, Getty Images, Leela)

Real estate fundraising hits lowest level since 2013

Blackstone's Jonathan Gray and an aerial of Industry City (Credit: Getty Images and Google Maps)

Industry City gets $720M refinancing

From left: Blackstone's Jonathan Gray, Joseph Simone of Simone Development and 535 Zerega Avenue in the Bronx (Credit: Google Maps, Simone Development)

Blackstone buys Bronx warehouse for $29M from controversial carter

Canarsie Plaza and Blackstone’s Kathleen McCarthy (Credit: Google Maps and Blackstone)

Blackstone picks up Canarsie shopping plaza for $130M

arrow_forward_ios
Loading...