Blackstone to offer securities backed by U.S. rentals

October 28, 2013 02:35PM

The Blackstone Group’s single-family rental-backed offering is poised to become the first of its kind on Wall Street.

The offering, to be called Invitation Homes 2013-SFR1 and shopped by Deutsche Bank, allows investors to buy into securities backed by more than $500 million mortgages on single-family homes the company acquired and rented out since 2007, a portfolio that includes almost 40,000 homes.

“What we tried to do was not buy assets all over the country in some kind of scattershot way,” Stephen Schwarzman, co-founder, chairman and CEO of Blackstone said in a statement cited by CoStar Group. “What we tried to do was limit our purchases to certain markets where we thought that the recovery would be quite good. And if the cycle works the way we think, this should be a good thing for everybody involved.”

Blackstone was one of the first major property buyers to borrow against its holdings, which are expansive. Some of those note holders will now be able to cash out on Blackstone’s strategy, thanks to the securities offering.

News of the possible offering comes as Blackstone is reportedly shopping out the office portion of the tower at 717 Fifth Avenue, which is made up of three office condominiums. The building comes with an unusual arrangement in which the property owners pay taxes based on how much space they own rather than the value of that space. [CoStar]Julie Strickland