Private-equity fund snaps up foreclosures to turn into rentals

A private-equity fund that generated big profits by buying up empty data centers after the technology-stock bust in 2000 is now gambling on foreclosed homes, according to the Wall Street Journal.

The fund, GI Partners in Menlo Park, Calif., announced a $250 million investment in Waypoint Real Estate Group, an Oakland-based company that buys foreclosed homes at discounts and rents them out to tenants. The investment is among the largest to date by an institutional investor in the single-family rental space.

Richard Magnuson, managing director of GI Partners, said the private-equity fund could eventually expand its investment to $1 billion over the next two years if the initial round is successful.

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