Real-estate developer Stephen Ross and his partners spent more than a year digging into U.S. banks, including more than 100 with loans to local bakeries, gas stations and amusement parks. They hoped to spend about $1.1 billion buying or investing in lenders. But the deeper they went, the worse things looked. As a result, Related Cos., the New York firm in which Mr. Ross is chief executive, gave back the money it raised from roughly 150 investors, including hedge-fund manager David Einhorn. The firm did find several investments it was interested in but was outbid. In a prospectus, SJB had told potential investors: “We believe the environment presents a significant opportunity for SJB to consummate an attractive acquisition of one or more institutions, whereas the current weakness in the banking sector and a potential long duration of any recovery create a favorable long-term environment to build a successful commercial bank.” Terms of the pool required SJB to invest the money within 18 months [but]…with the clock ticking on its 18-month deadline, Messrs. Ross, Blau and Beal sent a letter to investors Aug. 18 informing them that the fund would be liquidated. Investors received roughly 97 cents on the dollar after expenses. Mr. Blau, Related’s president, had led the effort to find potential investments for the fund [and] in many cases, didn’t liked what he saw, including loans that were secured by portable toilets and bowling balls. “It was a lot of work, and it was hard to make the numbers work,” he said. [WSJ]