Stage Two of the Housing Bubble Begins: Blackstone to Lend to Others for “Buy to Rent”

As we all know, any good ponzi scheme needs a continued stream of new investors in order to keep it going otherwise the whole thing falls apart.  We also know that the current rebound in the U.S. housing market is a centrally planned monster, led by private equity firms with access to cheap money and laundered foreign capital flooding into depressed markets, crowding out American families looking to purchase a home. Well now that Blackstone has spent more than $5 billion in its “buy-to-rent” scheme, it wants others to be able to “participate” in this wonderful investment opportunity (after them of course).  Oh and by the way, one of the most common ads on the local radio here in Boulder as of late explains to people how they too can “get in” on the buy-to-rent trade.  Best of luck. From Bloomberg:

Blackstone Group LP, the private-equity firm that has spent $5 billion on more than 30,000 distressed houses, is preparing to expand its bet on the housing recovery by lending to other landlords.

The firm, which already owns more rental homes than any other investor, has set up B2R Finance LP to offer loans starting at $10 million, according to four people who reviewed the terms. B2R is reaching out to landlords with portfolios of properties seeking to grow in the burgeoning industry for single-family homes to rent, said the people, who asked not to be identified because the discussions are private.

At least five rental companies have received non-binding term sheets from B2R, according to the people. Jeffrey Tennyson, the former chief executive officer of mortgage originator EquiFirst Corp., is running the firm, which stands for buy-to-rent. He previously led EquiFirst to become the 12th-largest wholesale subprime lender in the U.S. by 2007, when Barclays Bank PLC bought it. The London-based bank closed the business two years later after the market collapsed.

Tennyson didn’t return phone messages seeking comment on his role at B2R. Peter Rose, a spokesman for Blackstone, declined to comment.

So basically we continue to recycle the same characters from the last housing bubble to come on in and do it again.

Many landlords have been constrained since they’ve deployed all their equity and would have to sell assets to buy more homes, according to Cisterna.

“A lot of our clients are capped between 25 and 100 homes, and with good loans these investors are going to be able to triple their holdings,” he said.

Sell assets to buy assets?  Come on, that sounds like capitalism.  This is a centrally planned ponzi, so that just won’t work.

Cerberus’s First Key has completed two loans, according to a person familiar with the business started by the New York-based investment firm. The company aims to provide $5 million to $100 million of financing to rental investors — unable to secure credit lines from Wall Street — who’ve also outgrown government-backed mortgage guarantors.

PIA Group is seeking to more than triple its 500-home portfolio in the next 3 1/2 years with the help of financing.

“I’m not sure we’ll get there, because the voracity of the investors is huge,” Levy said.

I’m sure you’ll get there Mr. Levy.  Mr. Schwarzman needs you to get there.

Full article here.

In Liberty,
Mike

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