Blackstone becomes largest owner of rental properties

October 23
2:10 PM 2013

The Blackstone Group LP, under the aegis of Steve Schwarzman, had spent about USD7.5 billion for the acquisition of 40,000 homes in the past two years. With such an inventory, the firm was able to create the largest single family rental business in the United States. 

Now, the next move of the company is to sell bonds backed by lease payments, which is the latest step in growing a former small side business into a mature and revenue generating industry.

Deutsche Bank would be marketing nearly USD500 million worth of securities as soon as this week, according to a source with knowledge of the transaction. The debt would include a portion granted the highest investment grade from one of the premier ratings firms. This was confirmed by another source, as both sources sought anonymity as the deal was not yet made public.

Blackstone had led the way in the purchase of 200,000 houses to be rented out after prices fell 35% from the 2006 peak. The largest investors in the funds are seeking to earn profits from the increasing prices and rising demand for rentals as a backlash from the harsh experience of Americans undergoing foreclosure or remain unqualified for a mortgage. They now turn to the bond market for increased capitalization to purchase more properties and increase returns over the loaned cash.

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