Deutsche Bank AG (DB:US) is marketing $479.1 million of bonds backed by mortgages on 3,207 single-family rental homes owned by Blackstone (BX:US) Group LP, according to two people with knowledge of the offering.
A $278.7 million portion of the deal is rated AAA, the top credit rating, by Moody’s Investors Service, Kroll Bond Rating Agency and Morningstar Inc. The deal is the first of its type as Blackstone leads a $20 billion buying spree of single-family homes to rent by institutional investors.
Private equity firms, hedge funds and real estate investment trusts started buying homes to rent after prices plunged 35 percent from the 2006 peak. New York-based Blackstone, the world’s largest private equity firm, has been spending about $100 million a week on properties across the U.S. since the start of this year, when Wall Street increased lending to the sector.
Institutional investors have purchased as many as 200,000 homes during the past two years, seeking to profit from rebounding prices and rising demand for rentals among millions of Americans who went through foreclosure or can’t qualify for a mortgage. The firms are looking to the bond market for capital to buy more properties and increase returns with borrowed money.
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