The Cogsville Group purchased 94 Fannie Mae properties in Chicago as part of the Federal Housing Finance Agency’s REO pilot initiative. The New York-based private equity firm is the second winning bidder in the program.
All of the properties were sold near or above market value. The 94 properties include 111 units, 68 of which are occupied. The third party valuation for the properties equals $13.7 million, and the transaction value to Fannie Mae is $11.8 million.
In September, the FHFA announced Pacifica Companies as the first winning bidder, purchasing 699 Fannie properties in Florida.
The program's winning bids are coming from investors more comfortable with tight cash flow margins. Investors who modeled their bids to bank on home price increases either pulled out of the process or were outbid.
“Our acquisition of these Chicago assets is a natural outgrowth of The Cogsville Group’s successful public-private investments in commercial real estate," company Chief Executive Donald Cogsville said. “With the shifting fundamentals in the housing markets, single family residential is fast becoming an important asset class.”
Cogsville is a large acquirer of distressed assets from the federal government. It participated in $3 billion of transactions with the Federal Deposit Insurance Company in 2010 and 2011. This portfolio is well diversified across asset classes and is collateralized by 3,900 loans in 49 states.
Fannie will continue to offer for-sale pools of properties in markets across the nation that have a strong demand for rental housing and a substantial supply of REO properties.
The FHFA said Interested investors can continue to prequalify for future real estate owned transactions.