The Real Deal New York

Second-largest U.S. landlord to offer bonds backed by rents

January 29, 2014 06:15PM

Three months after Blackstone Group completed its first sale of bonds backed by rental home payments, single-family landlord American Homes 4 Rent has tapped Goldman Sachs to arrange the sale of its own similarly-styled securities.

The company could sell as much as $500 million of the debt, two people familiar with the offering told Bloomberg. American Homes 4 Rent, as the second-largest single-family landlord in the U.S. (Blackstone is first), has reportedly spent as much as $3.5 billion to gather more than 21,000 rental homes across the country.

The sale of rental bonds is a newly tapped stream of capital for landlords, following a $20 million home-buying spree by private equity firms, hedge funds and other investors over the last two years. The situation is also bolstered by the more than 8 million homeowners who fueled the demand for rentals after losing their properties to foreclosure since the market’s peak in 2007.

“This could be a $15 billion or $20 billion-plus-a-year kind of an asset class,” Ryan Stark, a director who runs mortgage finance at Deutsche Bank, which led the initial $479 million offering for Blackstone, said in a Las Vegas conference speech cited by Bloomberg. [Bloomberg] — Julie Strickland