When Blackstone (BX +1%) in November launched the first-ever securitization of single-family rental payments, the top tranche of the $479M deal priced at just 115 bps over Libor and was 5x oversubscribed, but that aggressive pricing could come back to haunt.
After trading in the secondary market at above face value for the last three months, one dealer recently offered the riskiest slice at below par.
Institutional types have spent about $20B for 150K homes since the crisis and are now looking to monetize or at least get a return on that investment. “Now that there’s been a ground swell of purchasing properties, are we now not seeing the major funds trying to offload," one securitization conference attendee recently asked Deutsche's Ryan Stark - one of those who put together the Blackstone deal.
Blackstone's been going gangbusters of late as single-family housing is but a small slice of its business, but the performance of pure-play rental shops - SBY, AMH, ARPI - leaves something to be desired. A new entrant - Starwood's SWAY - began trading yesterday.