The $300M bond - the first-ever security backed by home-rental cash flows - will be offered by Blackstone (BX) and underwritten by Deutsche Bank (DB). Pre-marketing is expected to begin within two weeks.
The REO-to-rental model has become big business in the past few years, led by Blackstone which now owns more than $6B in single-family properties. Players have relied on equity investments and warehouse financing for funding, but securitization of cash flows - opening up a vast new avenue for cheap financing - could open up things even more.
This particular security is expected to have credit ratings from Kroll, Morningstar, and Moody's according to sources, but the agencies themselves are breaking brand new ground and have plenty of reservations, beginning with the lack of historical rental data.