Blackstone, the largest investor of single-family rental homes, is introducing a new security-backed investment.
The product promises to provide investors with an income stream from rental properties, but also a potential return when the properties are sold. JPMorgan, Deutsche Bank, and Credit Suissee will reportedly market about $500 million of the securities.
Blackstone has invested an estimated $5.5 billion in homes, buying up mostly foreclosures in Western states and turning them into rental properties. Investors are telling the media they want to know more about the specifics of the plan before they sign on.
“I do believe that securitization serves a great purpose if done well,” Laurie Hawkes, president and chief operating officer of American Residential Properties, a single-family REIT, told CNBC. “But I think it takes a little more development coming.”
Investors are interested in details such as “where the rental properties are, the prospects for those particular housing markets, and how the properties are being managed,” CNBC reported. “Longer-term investors also want to understand the future of this new asset class.”
Despite falling foreclosures and rising home prices, institutional investor purchases remain high. RealtyTrac reported that institutional investor purchases reached a high in September at 14 percent of all residential sales. All-cash sales made up 33 percent of transactions in September, up from 32 percent in August, the National Association of Realtors reported.