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

  • Oouch

    People who lose their home to foreclosure, renting them back, financed by bonds sold off by the purchasers of their debt at a discount, funded by the taxpayers, rebundled into these “bonds.” And who’s underwriting? The usual suspects.

    • Victor

      is there a way to short these bonds? When all the “usual suspects” are doing this you know the fix is in. I’d love to know who the suckers are that will buy this worthless sh*t paper.

  • Matt

    What could possibly go wrong?

  • CandelariaSchank

    The Bonds have been being Purchased by the every investor .

  • bob Swanson

    Holly cow. Who has a priority of lien? The mortgage holder???This kind of crap caused the last disaster. The barbarians at the gate.