Fannie Provides Financing For Blackstone's Single Family Rentals

[Elliott]

From WSJ, 1/24/17, "Fannie Mae has agreed to backstop up to $1 billion in debt from the country’s largest owner of single-family rental homes, the first time the government-sponsored entity has agreed to guarantee the debt of an institutional owner of single-family houses.

Blackstone Group LP’s Invitation Homes Inc. disclosed its agreement with Fannie on Monday in a filing detailing the company’s finances ahead of its planned initial public offering. After the foreclosure crisis, the New York investment firm spent roughly $10 billion buying and fixing up houses to rent through Invitation Homes."

I can now say, I've seen it all. Seems an unusual public policy decision.

 

[glenn walker]

Not unusual public policy because the public was never involved in the initial sale of thousands of homes to Blackstone at extreme discounts. What's unusual is these are portfolios of single family homes and most are rented out. Got to give Blackstone credit they stole these homes from Fannie and now get preferential financing that nobody else can touch.

 

[Randolph Kinney]

It would appear that Black Rock wants to monetize its holdings of rentals. Investors won't buy something that is as risky as a financial instrument based upon residential homes that are rented that has not been done before. It is a way to mortgage out the equity of these rentals. And we know what happens when landlords are upside down on their investments with near negative cash flow.

 

[J Grant]

Not unusual public policy because the public was never involved in the initial sale of thousands of homes to Blackstone at extreme discounts. What's unusual is these are portfolios of single family homes and most are rented out. Got to give Blackstone credit they stole these homes from Fannie and now get preferential financing that nobody else can touch.

the new America...owned by corporations, with policy favoring their interests. Corporations would like to see many more shut out of home ownership and having to rent from them. rental income provides better cash flow than many other investment vehicles. This move seems contrary to Fannie's traditional mission about home ownership, but nothing is what it was , we are in a new paradigm now.

 

[djd09]

Stephen A. Schwarzman is Chairman, CEO and Co-Founder of Blackstone. Mr. Schwarzman has been involved in all phases of the firm’s development since its founding in 1985. The firm is a leading global asset manager with $361 billion Assets Under Management (as of September 30, 2016).

http://ir.blackstone.com/investors/corporate-governance/default.aspx

 

[J Grant]

Perhaps Fannie is gearing up to be privatized. With reduced oversight/ govt ties they can jack up rates to individual homeowners and provide favorable rates for investors and UW corprate deals. The "little guy", along with depressed min wage and no health insurance can now look forward to never owning a home and renting forever. The new America is here.

 

[djd09]

And who bailout Fannie in the first place?

 

[Mark K]

Investors won't buy something that is as risky as a financial instrument based upon residential homes that are rented that has not been done before.

Check out the stock and bonds issued by American Homes for Rent, a similar situation. They've bought 10s of thousands of homes and are renting them out. AH4R has purchased over 300 homes in this area and have basically paid full price. These were not distressed or foreclosed homes. I guess if you're using other people's money, price is no object. And investors are snapping up the bonds and preferred stocks like crazy so Blackstone decided to follow suit.

Problem with AH4R is the tenants despise them. Google it. You have to wonder how long the company can stay in business with a business model that includes ignoring maintenance and screwing the tenants.

Huffpo is mostly a worthless POS but this article explains the business models.

http://www.huffingtonpost.com/2013/10/25/wall-street-landlords_n_4151345.html

 

[Tim The Enchanter]

This move seems contrary to Fannie's traditional mission about home ownership, but nothing is what it was , we are in a new paradigm now.

Contrary to mission, yes.
New? No, it's still the same old Golden Rule. Guys with the gold.........

 

[DTB]

Check out the stock and bonds issued by American Homes for Rent, a similar situation. They've bought 10s of thousands of homes and are renting them out. AH4R has purchased over 300 homes in this area and have basically paid full price. These were not distressed or foreclosed homes. I guess if you're using other people's money, price is no object. And investors are snapping up the bonds and preferred stocks like crazy so Blackstone decided to follow suit.

Problem with AH4R is the tenants despise them. Google it. You have to wonder how long the company can stay in business with a business model that includes ignoring maintenance and screwing the tenants.

Huffpo is mostly a worthless POS but this article explains the business models.

http://www.huffingtonpost.com/2013/10/25/wall-street-landlords_n_4151345.html

Professional tenants will ALWAYS have complaints. Anecdotal at best.