The Blackstone Group is breaking new ground—and raising new concerns—with the first-ever U.S. home-rental asset-backed securities deal.
The alternative investment giant's lead banker, Deutsche Bank, held a roadshow for the $480 million deal last week, with stops in New York, Boston and Los Angeles. Deutsche Bank also directed its bankers in London to drum up interest from European investors for the deal, which is to be announced today.
Invitation Homes 2013-SFR1 is billed as a hybrid residential and commercial mortgage-backed security. The deal's collateral is the rental income from 3,207 foreclosed single-family homes, primarily in Arizona, California, Florida and Georgia.
In addition to Deutsche Bank, Credit Suisse and JPMorgan Chase are co-structuring the deal.
According to IFR, some investors and ratings agencies expressed concern that Blackstone did not have enough pledged equity capital in the deal, and that there is no apparent contingency plan if Blackstone shuts down the property manager, which is a subsidiary of its Invitation Homes business.