ARPI Is A New Residential REIT That Is Growing Fast
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ARPI vs. ETF Alternatives
Thursday, Mar 63:47 PM
Thursday, Mar 63:47 PM| Comment!
- After giving a AAA rating to a portion of the first bonds backed by home rental payments to come to market late last year, Moody's is requesting comments on its proposed methodology. Moody's decision on the first deal was based on the liquidation value of the homes under a "heavily-stressed scenario."
- Competitor S&P, as well as Fitch say the paper doesn't yet meet the criteria for them to assign top ratings. In Moody's request for comment, it says when grading the deals it's focused on two sources of cash flow: Rental income and proceeds from the sale of the underlying properties.
- American Homes 4 Rent (AMH +0.3%) is prepping a rental bond of its own, and others in the sector like Silver Bay Realty (SBY +1.4%), American Residential Properties (ARPI -1.9%), and Starwood Waypoint (SWAY +1.2%) no doubt have their own plans. Last year's pioneer Blackstone (BX +0.1%) is surely eyeing up a 2nd offering as well.
Thursday, Feb 203:54 PM
Thursday, Feb 203:54 PM| 4 Comments
- American Homes 4 Rent (AMH -1.4%) last night announced the resignation of CFO Peter Nelson "to pursue other career interests." The company hopes to follow Blackstone's (BX +1.4%) first-ever rental securitization with one of its own and reportedly last month hired Goldman to lead the deal.
- Speaking of Blackstone's rental securitization, rents collected on the collateral for that paper fell 7.6% from October to January, according to Morningstar. "Payments declined as expiring leases and early tenant departures left residences backing the bonds ... vacant," according to the report.
- Tied at least tangentially to single-family rentals are parts of Bill Erbey's empire, and it's struggling today following earnings reports from Altisource Asset Management (AAMC -7.2%) and Altisource Residential (RESI -5.8%). Others in the family: Altisource Portfolio Solutions (ASPS -5.9%), Ocwen (OCN -1.3%), and Home Loan Servicing Solutions (HLSS -1.4%). A summary of how they fit together is here.
- Other single-family REITs: Silver Bay (SBY -0.9%), American Residential (ARPI), and Starwood Waypoint (SWAY -1.5%).
Tuesday, Feb 410:32 AM
Tuesday, Feb 410:32 AM| 2 Comments
- 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.
Thursday, Jan 94:19 PM
Thursday, Jan 94:19 PM| Comment!
- The company has been in investor meetings this week making the case for its single-family rental business, say sources, setting the stage for its first securitization of rental payments.
- No details are available yet, but it's expected American Homes 4 Rent (AMH) will pitch the new paper at an ABS conference in Vegas later this month.
- As of the end of Q3, AMH had a $3.5B portfolio of 21K foreclosed homes purchased for the purpose of renting them out. As comparison, Blackstone - which successfully launched a $479M bond late last year - has over 40K homes. These securitizations will provide another cheap source of capital for the single-family players, allowing them to be even more aggressive in their purchases of homes.
- Others: SBY, ARPI
Friday, Dec 202013, 12:59 PM
Friday, Dec 202013, 12:59 PM| 4 Comments
- "It's gone from being good to being disturbing," says former Fannie Mae economist Thomas Lawler, of Wall Street's rush into the single-family landlord business as described by Bloomberg's Heather Perlberg and John Gittelsohn in a great read.
- Blackstone (BX +0.1%) is clearly at the vanguard of the move, but it's joined by American Homes 4 Rent (AMH +0.5%), American Residential Properties (ARPI +0.1%), Silver Bay Realty Trust (SBY +0.2%), and a unit Colony Financial (CLNY +0.8%).
- With easy and cheap access to capital, the Wall Street firms have become the gorillas in the single-family market, outbidding first-time homebuyers and maybe driving up prices towards another property bubble. And capital may be about to get even cheaper and easier thanks to Blackstone's recent raising of $479M through the securitization of rental payments on homes it owns. American Homes 4 Rent and Colony have their own securitizations in the works.
Thursday, Dec 192013, 4:11 PM
Thursday, Dec 192013, 4:11 PM| Comment!
- American Residential Properties (ARPI) boosts its available financing by $40M to $380M, adding JPMorgan as a lender in its credit facility. The accordion feature allows future expansion all the way up to $500M.
- "We are very pleased that another major bank has recognized the attractive economics of the single-family rental market and committed to providing additional capital that we can utilize to further grow our portfolio and create long-term value for our shareholders," says COO Laurie A. Hawkes.
- Press release
Friday, Dec 62013, 2:45 PM
Friday, Dec 62013, 2:45 PM| 1 Comment
- The single-family rental payment securitization market could be a $5B one next year, estimates Deutsche, which led the first such deal - one secured by rents from Blackstone (BX) rental homes.
- Deutsche estimates 90K homes have been purchased by institutional investors over the past two years, with Blackstone leading the way, investing about half of the $15B spent. Next up is American Homes4Rent (AMH +2.4%), buying about 19.8K homes for $3.3B, followed by Colony Financial (a unit of CLNY), Silver Bay (SBY +0.2%), Starwood Waypoint (a unit of STWD and prepping to be spun off), and American Residential (ARPI -0.3%).
- Should the securitization market take off as Deutsche expects, it would provide a sizable new source of cheap financing for these players.
Thursday, Nov 212013, 4:24 PM
Tuesday, Nov 192013, 11:51 AM
Tuesday, Nov 192013, 11:51 AM| Comment!
- The rental yield return expected from the single-family rental plays doesn't look too exciting, but Susquehanna's Jack Micenko says the best way to analyze the group is on the value of their home portfolios, with average house age a key factor
- American Homes 4 Rent (AMH -0.4%) is the only one of the group he sees a Buy after calculating a net asset value of $27.75 per share by year-end 2015 vs. today's price of $16.70, and figuring the sector should trade at a 25% discount to NAV.
- Others: SBY, ARPI
Thursday, Nov 142013, 4:10 PM|Thursday, Nov 142013, 4:10 PM| Comment!
Monday, Nov 112013, 6:34 PM|Monday, Nov 112013, 6:34 PM| Comment!
Monday, Nov 112013, 8:11 AM
Monday, Nov 112013, 8:11 AM| 3 Comments
- American Homes 4 Rent (AMH) will join Blackstone in offering bonds backed by rental payment streams from its single-family property portfolio. The company board has approved the deal which is expected to more forward within the next 90 days.
- Blackstone got the ball rolling this month, successfully raising $479M backed by rent checks from 3,207 properties.
- Publicly-traded single-family rental businesses have struggled since coming public, but these new securities offer the companies a lower cost of capital. Gamechanger? Sterne Agee - mostly negative on everything housing-finance-related - thinks so.
- Other names of interest: SBY, ARPI.
Monday, Nov 112013, 7:41 AM
Monday, Nov 112013, 7:41 AM| Comment!
- JMP Securities isn't giving Silver Bay (SBY) management any more time to get its single-family rental model clicking, pulling its Buy rating and downgrading to Hold.
- About one year after its IPO - and amid a major stock market rally - Silver Bay is off nearly 14%, and the most recent earnings report and conference call showed a company still unable to get a handle on the expenses of running a rental empire.
- Competitor American Residential Properties (ARPI) is off 14% since its May IPO, and American Homes 4 Rent (AMH) has eked out a near-4% gain since coming public in August.
Friday, Nov 82013, 1:12 PM
Friday, Nov 82013, 1:12 PM| 9 Comments
- "We have two takeaways from the quarter and both are negative," says Sterne Agee of the mortgage finance and servicing sector:
- 1) The land grab is coming to an end, i.e. the easy money (for servicers) from buying MSRs being unloaded by the banks is about done. While regulators want more MSRs out of the banking system, this must be balanced against the GSEs which may be slowing down the approval process as they question the transfer of servicing rights from banks to nonbanks.
- 2) HARP margins are down more than expected and the pipeline of future volumes is slowing.
- Already taking a hit amid disappointing earnings were OCN, NSM, WAC, PMT, WD, and NRZ. "We think it will take two to five days for investors to readjust to the quarter's disappointing news and then investors will need to take a more realistic, long-term view," says the team, which, nevertheless, upgrades Two Harbors (TWO -2.7%) to Buy because of its new mortgage servicing investment.
- Also of interest are the single-family rental shops, SBY, AMH, ARPI amid Blackstone's successful rental securitization. High leverage combined with this new low cost of funds could make for some "exceptionally high" return on equity.
Wednesday, Nov 62013, 9:49 PM
Wednesday, Nov 62013, 9:49 PM| Comment!
- Silver Bay Realty Trust (SBY): Q3 net operating income of $4.5M gains 44% from Q2 on revenue of $14.5M, up 35%. Standing out are property management fees of $3.7M on rental revenue of $14.5M - that's 25%. It's hard making money in this business with a 10% management fee.
- Estimated net asset value of $19.50 per share up 3% - this measure is based on the company's estimate of fair value of properties. Book value is $17.16 per share, down from $17.30 in Q2.
- The company stopped buying homes in Q3, and 4,521 homes from the owned portfolio of 5,575 homes are now leased, bringing total occupancy to 81% from 65% in Q2. Occupancy for properties owned 6 months or longer rises 200 basis points to 89%.
- Average monthly rent of $1,161 vs. $1,148 in Q2.
- 500K shares repurchased at average price of $15.58 per share.
- CC tomorrow at 9 ET. (PR).
- Shares gained 3.1% in the regular session today as Blackstone's (BX +0.4%) first securitization of rental payments got off to a big start with the company able to borrow more against the assets than had been expected . Other single-family rental stocks: American Homes 4 Rent (AMH +1.8%), American Residential Properties (ARPI +2.4%).
Friday, Nov 12013, 2:45 PM
Friday, Nov 12013, 2:45 PM| Comment!
- Many eyes will be on Blackstone's (BX +2%) upcoming sale of a bond backed by the rental stream from single-family homes owned by its Invitation Homes unit. The size of the offering is now expected at $479M and is supposed to be coming to market next week, reports the WSJ.
- If successful (and why wouldn't it be amid a quest for any sort of yield), it looks to unlock a whole new wave of capital to be deployed into the sector, not just for Blackstone, but for single-family rental shops like American Homes 4 Rent (AMH +1%), Silver Bay (SBY -0.2%), American Residential Properties (ARPI +0.4%).
- "We're rooting for them," says Richard Saltzman, CEO of Colony Capital (CLNY +1.1%), whose spin-off of its single-family rental unit - Colony American Homes - was dropped this summer amid the dive in REIT prices.
- Back to the Blackstone offering ... There are 3,207 homes whose rents back the paper, with 1,365 of them in Phoenix, about 900 in three different CA cities, 325 in Atlanta, and 257 in Tampa. The ratings on the different tranches range from AAA to junk.