Is “Buy to Rent” Dead? – Rents on Blackstone Housing Bonds Plunge 7.6%

Just last week, I highlighted the fact that the return of subprime home loans was just another bankster scam to get private equity players and hedge funds out of the properties they had rushed into throughout the U.S. by dumping them on retail muppets. More evidence that this may indeed be the case emerged today as Bloomberg reports that rents backing the properties in the Blackstone’s rental-home bonds dropped 7.6% from October to January.

Look, I have no idea what the assumptions were, but with home prices surging throughout the nation, shouldn’t these Wall Street slumlords have considerable pricing power? Apparently not.

From Bloomberg:

Rents collected on the collateral for the first U.S. rental-home securities declined by 7.6 percent from October to January, according to Morningstar Inc.

Payments declined as expiring leases and early tenant departures left residences backing the bonds of BlackstoneGroup LP’s Invitation Homes vacant, Becky Cao and Brian Alan, analysts at Morningstar’s credit-ratings unit, said in a report. While 8.3 percent of the properties were vacant or occupied by delinquent renters in January, renewals on 78.5 percent of leases that expired the prior month exceeded the analysts’ expected rate of 66.7 percent.

Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment.

Morningstar said it expects a stabilized vacancy rate of 8 percent for homes underlying the first deal after it granted AAA grades to $278.7 million of the notes. Wall Street ultimately may sell more than $20 billion a year of rental-home bonds as investors become comfortable with those tied to smaller landlords, according to Ryan Stark, a director at Deutsche Bank AG, which structured and helped underwrite the transaction.

Keep flipping them homes ‘merica.

Full article here.

In Liberty,
Michael Krieger

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