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发信人: challenger (Ray), 信区: Living
标 题: blackstone rushed to buy 16,000 single family homes last year
发信站: BBS 未名空间站 (Wed Jan 9 09:10:19 2013, 美东)
Blackstone has spent more than $2.5 billion on 16,000 homes to manage as
rentals, from the $13.3 billion fund it raised last year.It is buying in
Atlanta, Chicago, Las Vegas, Phoenix, Northern and Southern California,
Miami, Orlando and Tampa, Florida.
(BN) Blackstone Rushes $2.5 Billion Purchase as Homes Rise: Mort gages
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Blackstone Rushes $2.5 Billion Purchase as Homes Rise: Mortgages
2013-01-09 05:00:02.0 GMT
By John Gittelsohn and Heather Perlberg
Jan. 9 (Bloomberg) -- Blackstone Group LP, the largest U.S.
private real estate owner, accelerated purchases of single- family homes as
prices jumped faster than it anticipated.
Blackstone has spent more than more than $2.5 billion on 16,000 homes
to manage as rentals, deploying capital from the
$13.3 billion fund it raised last year, said Jonathan Gray, global head of
real estate for the world’s largest private equity firm. That’s up from $1
billion of homes owned in October, when Blackstone Chairman Stephen
Schwarzman said the company was spending $100 million a week on houses.
“The market is moving much faster than anybody thought possible,”
Gray said during an interview in Blackstone’s New York headquarters. “
Housing is much stronger than people anticipated.”
Blackstone is the largest investor in single-family homes to manage as
rentals, acquiring properties in nine cities, from Miami to Phoenix, where
prices surged 22 percent in the 12 months through October. The firm, along
with Thomas Barrack’s Colony Capital LLC and Two Harbors Investment Corp.,
is seeking to transform a market dominated by small investors into a new
institutional asset class that JPMorgan Chase & Co. estimates could be worth
as much as $1.5 trillion.
The market, which has been “dominated by ‘Mom and Pop’
owners” could total 12 million homes and be double the size of the
institutional multifamily market, JPMorgan analysts led by Anthony Paolone,
wrote in a note yesterday. “A corporate structure with institutional
capital around the business makes sense.”
Racing Recovery
Blackstone, which started buying the properties last year, has been
racing against the real-estate recovery as prices across the U.S. rose more
than economists forecast, with the areas hardest hit by the crash rebounding
the most.
The S&P/Case-Shiller index of property values in 20 cities increased 4.
3 percent in the 12 months through October, the biggest 12-month advance
since May 2010, the group said last month in New York. Prices will gain 3.3
percent in 2013 after an estimated 4.5 percent jump last year, based on the
median estimates of 15 economists and housing analysts surveyed by Bloomberg
News.
Blackstone is buying in Atlanta, Chicago, Las Vegas, Phoenix, Northern
and Southern California; Miami, Orlando and Tampa, Florida -- where prices
fell so far that they “overshot,” said David Roth, managing director at
Blackstone overseeing single-family home rentals.
‘Warehousing’ Homes
Blackstone has been purchasing through foreclosure auctions and short
sales, in which banks agree to accept less than is owed on the mortgage,
after more than 5 million homeowners lost their homes since the market’s
peak in 2006.
It’s bought so quickly it’s “warehousing” more than half of the
homes it’s acquired as it completes the purchase and hires staff and
contractors to renovate and rent the properties, Gray said. It takes about
30 days to fix each home and then as much as 30 days to lease the property,
he said.
“Renovating the 16,000 homes is an enormous job,” Gray said.
By comparison, D.R. Horton Inc., the largest U.S.
homebuilder by volume, sold 18,890 homes and generated $5.35 billion in
revenue in fiscal 2012.
Colony Capital has bought about 5,500 homes since April, spending more
than $500 million, and expects to reach $1.5 billion invested by the end of
the year. Closely held Waypoint Homes said it has bought about 2,500 homes
and expects to have 10,000 homes by the end of 2013.
‘Strong Appetite’
“We are seeing increased supply of rental homes as some of these big
companies have moved into the space, but we’re still seeing a strong
appetite as well,” said Colin Wiel, co-founder and managing director of
Waypoint. “We always anticipated that prices were going to rise pretty
quickly. They’ve risen quicker during the last 12 months than we would’ve
guessed.”
Blackstone currently buys all of its homes with cash and then finances
pools of houses with up to 60 percent debt.
Conventional single-family home mortgages are financed with a 20-percent
down payment.
The firm got a $600 million line of credit from Deutsche Bank AG in
October. It’s in talks with the Frankfurt-based lender to double the
financing, according to two people with knowledge of the negotiations.
Deutsche Bank will lead a group of banks that will contribute an additional
$600 million, according to the people, who asked not to be identified
because the talks are private.
‘Limited Leverage’
Financial institutions have been slow to back single-family rental
homes, because large investors have little history to demonstrate cash flows
and cost of operations.
“While leverage is currently limited, potential financing options
include secured credit lines, lending syndicates, high- yield debt,
government sponsored enterprise-provided financing, and securitization,”
Jade Rahmani, an analyst with Keefe, Bruyette & Woods Inc. in New York,
wrote in a note yesterday.
Citigroup Inc. extended a $245 million line of credit to Waypoint in
October, enabling the investment firm to multiply its initial $150 million
in capital from GI Partners, a Menlo Park, California-based private equity
fund. American Residential Properties, which has 1,500 homes in five states,
received a line of credit from Wells Fargo & Co. in June 2010. The company
announced plans for an initial public offering of shares as early as the
first quarter of this year, depending on market conditions.
Blackstone’s strategy in real estate generally has been to “buy, fix
and sell,” said Gray, who in 2007 engineered the largest real estate buyout
ever when Blackstone acquired Sam Zell’s Equity Office Properties Trust
for $39 billion including assumed debt. Gray’s real estate business brought
in $1 billion in profit for the firm in 2011.
In the case of the single-family business, Blackstone will rent and
manage the homes through Invitation Homes, which it founded last year with
Riverstone Residential Group, an apartment management company based in
Dallas.
While Blackstone ultimately will benefit from the properties’ price
appreciation, in the meantime, the homes will generate revenue and cash flow
, Gray said.
“We’re building a real company,” he said.
For Related News and Information:
Mortgage columns: NI MTGCOL
Housing and construction data: HSST World real estate indexes: RMEN
> Stories on U.S. real estate: TNI US REL
--Editors: Pierre Paulden, Rob Urban
To contact the reporter on this story:
John Gittelsohn in Los Angeles at +1-323-782-4257 or j******[email protected];
Heather Perlberg in New York at +1-212-617-0407 or h*******[email protected]
To contact the editor responsible for this story:
Kara Wetzel at +1-212-617-5735 or
k*****[email protected];
Rob Urban at +1-212-617-5192 or
r*****[email protected] |
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