Goldman Sachs Wants To Profit From US Real Estate Rebound
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The bank that bet big on a housing market crash in 2007/08, and profited from it, is about to place another bet on the US real-estate market. This time, Goldman Sachs is taking aim at a rebounding property market in the United States.
The bank that bet big on a housing market crash in 2007/08, and profited from it, is about to place another bet on the US real-estate market. This time, Goldman Sachs is taking aim at a rebounding property market in the United States.
According to Bloomberg who obtained a marketing document, Goldman is now raising money for a new investment fund that will buy ‘senior-ranked securities without government backing, many of which now carry junk credit grades.’
The Goldman Sachs document said:
[quote] Stablization in the U.S. housing fundamentals is creating an attractive investment opportunity. Many of the ingredients are in place for continued improvement in housing. [/quote]
Bloomberg adds that the improvements include near-record affordability, a better supply-and-demand balance, and policymakers’ renewed focus on bolstering real estate.
Over in Europe, Reuters reports that Goldman Sachs is eyeing a $3 billion property debt fund, in a bid to take advantage of a growing shortage of real estate financing across the United Kingdom and Europe.
Through its private equity arm, the Real Estate Principal Investment Area, Goldman is looking to sell senior and mezzanine loans to property investors, a risky yet highly lucrative form of real estate debt.
Related Story: The Secret Goldman Sachs Report: Eurozone Collapse And How To Profit From It
Related Story: Goldman Made Greece Eurozone Crisis Worse – For Big Profit
In 2007/08, Goldman Sachs was accused of short-selling mortgage backed securities and profiteering almost $4 billion by betting on a sub-prime market crash.
While Goldman has vehemently denied these allegations, the Wall Street Journal reported in February that the SEC is considering civil action against Goldman, investigating the Bank for its failure to disclose important information when selling collatarised debt obligations, a security backed by toxic subprime mortgages.
Related: Collateralized Debt Obligations
Related: Effect Of US Subprime Mortgage Crisis On The Banking Sector
Related News: US To Sue Banks Over Subprime Mortgage Loans
According to the Journal, other banks including Wells Fargo, Bank of America, Citigroup and Deutsche are also being investigated by the SEC.
However, it would not be the first time that Goldman Sachs faces SEC punitive action. In July 2010, the SEC fined the bank $550 million for improperly disclosing hedge fund manager John Paulson’s bet against almost $5 billion of CDOs – the largest SEC settlement ever paid by a Wall Street firm.
Related Story: Into The Belly Of The Beast: Part I – How Goldman Sachs Became The Most Hated Bank On Earth, and Part II – Goldman Sachs & The European Crisis
