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Blackstone Goes From Spree Buyer to Lender in US Residential market

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Blackstone Group  Dennis Cisterna  Haven Realty Capital LLC  B2R Finance LP  Leon Black''s Apollo Global Management LLC  Cerberus Capital Management LP  Johnson Capital  US residential market  US rental market  institutional investment  buy to rent sector 

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By - Friday 12 July 2013

Blackstone Goes From Spree Buyer to Lender in US Residential market

Mid-level investors in the US residential market are about to find a new funding source has become available. At a time when rising prices and mortgage rates look like starting to close the window of opportunity that was the US rental market, financial giant Blackstone Group says no to the fat lady's lovely singing voice as it launches a new company lending to buy to let investors.

Blackstone Group, the world's largest private equity firm is reported to have spent around USD 5 billion buying up over 30,000 distressed homes in the US, now B2R Finance LP will offer loans starting at USD 10 million to landlords interested in expanding their portfolios of single-family homes to rent.

"Not all investors are able to get a large credit facility and small ones from community banks aren't big enough," Sudha Reddy, chief executive officer of Haven Realty Capital LLC, an investor with 1,500 rental homes backed by Leon Black's Apollo Global Management LLC, told Bloomberg.

Blackstone has said that it is now coming to the end of its buying spree, in which it was joined by a group of institutional investors who collectively spent USD 17 billion buying 100,000 US homes in 2 years.

"This is the kind of thing that happens once -- every once in a while, where you see something that's a market-turning trend and we are loading the boat," Blackstone chief executive Stephen Schwarzman told analysts last October.

It is not a new thing for a big player in institutional investment to start up lending on the US buy to rent sector, as Cerberus Capital Management LP recently started a similar unit namely First Key Lending.

According to the Bloomberg article, B2R is to offer 75 percent loans on homes within pools of leased properties, and 65 percent of the cost of portfolios without tenants within interest rates between 5 and 7 percent. Irvine-based Johnson Capital is reportedly to underwrite the Blackstone loans, but co-head Dennis Cisterna would not discuss this specifically with Bloomberg, what he would say was:

"The market potential is absolutely huge. There are about 14 million rental homes in the U.S. with an average price of nearly USD 200,000. Even if you are financing 10 percent of that, it's certainly a large enough amount to warrant a new institutional lending sector."

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