JUNEAU -- The Alaska Permanent Fund Corp. is considering buying homes in distressed housing markets outside the state for an investment of $400 million.
Executive director Mike Burns told the Juneau Empire the fund may invest in hundreds of foreclosed properties and possibly more through a property management firm. The fund board of trustees made the decision at its Anchorage meeting this month. The board gave conceptual approval to the new strategy.
"We are going to places that have been hit the hardest," Burns said.
The homes will be managed as rentals, and when the market improves, sold for a profit. "We see the market has attractive pricing now," Burns said.
A $400 million investment would represent about 1 percent of the $40 billion fund.
Burns recently toured homes for sale in Tucson, Ariz. Some needed renovation, he said, but, "we're not in the fixer-upper business."
One home looked as if it had been prepared for transfer to new owners.
"The garage door openers were sitting on the kitchen counter, they'd cleaned the place -- kind of breaks your heart, honestly," Burns said.
Burns said the new investment strategy is a recognition that home sales prices have fallen below what some single-family houses are worth. "We are really looking for anomalies in the market," he said.
The investment in the fund is categorized under "special opportunities" rather than "real estate" investment.
"When we created the allocation to special opportunities, the purpose was to create room within the fund where we could take advantage of unexpected investment opportunities such as this single-family homes strategy" said board Chairman Bill Moran, president of Ketchikan's First Bank.
A shift in consumer interest from owning to renting presents a unique opportunity, Moran said.
The fund will not buy homes directly but will invest up to $400 million in American Homes 4 Rent LLC. The property management firm already owns 1,000 single-family homes, fund spokeswoman Laura Achee said.
Burns said it could take two years to make purchases and five to seven years before they are resold.