Banks boost credit lines to firms buying homes

TRD New York /
Jun.June 17, 2013 11:00 AM

Deutsche Bank is among several financial service providers lending a hand to private equity firms increasingly buying up homes to rent, Bloomberg News reported.

The firms, in turn, have sped up purchases, amid rising competition and prices, Bloomberg News said. More and more funds have begun leasing out the thousands of homes they bought at foreclosure auctions, through open market purchases and in bulk deals during dismal times.

Deutsche Bank arranged a $1.5 billion credit line for Blackstone Group to buy single-family properties after providing $2.1 billion to the firm earlier this year. The bank will eventually sell debt to investors by securitizing rental payments. Blackstone bought about 29,000 single-family homes in 13 metro areas, making it the largest owner in the U.S., Bloomberg said.

Silver Bay Realty Trust, a REIT that owns more than 5,000 homes, acquired a $200 million facility last month from Bank of America and JPMorgan, Bloomberg News said.

Some firms disapprove of the higher level of leverage, however. While the credit lines can help firms increase returns, Carrington Holding Co. CEO Bruce Rose cautioned against too much borrowing by rental investors, when yields narrow as purchase prices rise faster than rents.

As home values rise, rental yields have “compressed to 5 percent in the most popular cities for investors,” according a report from investment banking firm Goldman Sachs, Bloomberg News said. [Bloomberg News]Mark Maurer

Related Articles

A&E Real Estate Holdings principal Douglas Eisenberg and the properties (Credit: The Rego Park 18 Portfolio)

Deutsche Bank provided A&E $97M in financing for big Rego Park buy

55 Hudson Yards, Facebook CEO Mark Zuckerberg (Credit: Google Maps and Getty Images)

Here’s how much Facebook is paying at Hudson Yards

Jonathan Gray

Moving out: Blackstone sells remaining stake in Invitation Homes

Blackstone's Jonathan Gray (Credit: Getty Images and iStock)

Here’s a look at Blackstone’s industrial plays after its record-breaking portfolio purchase

From left: Jonathan Gray and Steve Schwarzman with Stuyvesant Town

Behind Blackstone’s “capital strike”

October Issue is Live

The Real Deal‘s October issue is now available to subscribers!

Blackstone's Jonathan Gray (Credit: Getty Images and Wikipedia)

Blackstone buys Colony Capital’s warehouse portfolio for $6B

Here’s why landlords don’t hate California’s rent control bill

Here’s why landlords don’t hate California’s rent control bill