True Value Investing
Beal Becomes Billionaire With FDIC Assets
By Anthony Effinger - Jun 28, 2011 9:00 PM PT
bloomberg.com
From the article:"...It was 1981, and Beal, then a 29-year-old vulture investor, was scoping out two 16-story apartment buildings owned by the U.S. Department of Housing and Urban Development. The bricks were chipped and bulging off the exterior of the buildings. Tenants had pried open the elevator doors and thrown furniture down the shafts.
Beal liked what he saw.
He and a partner bought the towers for $25,000 and a promise, backed by a $2.5 million letter of credit, to fix the bricks. They did the repairs -- employing armed guards for protection when visiting the apartments -- and never tapped the credit line before selling the buildings two years later to a New York doctor for $3.2 million, Bloomberg Markets magazine reports in its August issue...."
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Beal's latest venture into Banks includes Beal Bank Nevada. From the article:"...FHLB members, such as Beal’s banks, buy stock in the FHLBs and get the right to borrow against their own loans and other assets. As of Dec. 31, Beal Bank Nevada had advances of $1.4 billion from the Dallas FHLB, making it the third-largest borrower..".
It's a pretty good deal to pick up Government guaranteed assets using borrowed money at little to no cost.
EKS |
