Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
With the financialization of all things in the country, one of the last big asset classes that was left to the mom and pop was residential homes. But the housing bust and ensuing easy money policies by the Fed has led to the ultimate step – homes now being an institutional asset class. Head of the class? Private equity firm Blackstone (BX) who now is the largest owner of U.S. residential properties in the country. And they want more..
- Blackstone Group LP (BX), manager of the largest real estate private-equity fund, has expanded a credit line to buy single-family homes to $2.1 billion from $600 million, according to a person with knowledge of the deal. “The deal demonstrates that the market for these types of loans is expanding and maturing as major Wall Street banks become more and more comfortable with the asset class,” Stephen Blevit, an attorney for Sidley Austin LLP who represented Deutsche Bank, said in an e-mail from Los Angeles.
- Blackstone has invested $3.5 billion to buy 20,000 single- family rental homes since last year, making the New York-based company the largest investor of its type in the U.S.
- The single-family home rental business, which has been dominated by small investors, is attracting more institutional capital. American Homes 4 Rent, a Malibu, California-based company headed by Public Storage (PSA) founder B. Wayne Hughes, has acquired about 10,000 properties. Thomas Barrack’s Colony Capital LLC has raised $2.2 billion for home purchases.
And we know where this is leading to…
- “The next milestone to come is the securitization of single-family residential rental homes, which we expect will occur in the second half of 2013,” Blevit said, referring to bonds that bundle pools of loans and slice them into securities of varying risk.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
