An interesting study from Kroll finds single-family rental properties whose rent payments were bundled into securitizations in Blackstone's initial deal rent for just 94% of market rate. Blackstone's issuance was followed by one by American Homes 4 Rent (AWH -0.3%) as well as another from Blackstone.
“It may be a function of the size of the properties or the age of the properties,” says Kroll's Michelle Patterson. Or perhaps the issuer was in such a hurry to get the homes filled and the debt deal done that properties were rented for less than they otherwise would have been. A person familiar with Invitation Homes (Blackstone) says rental rates are expected to converge with market rates over time.
The first securitization received strong demand from investors, but they asked for beerier yields the next time around.