Black­Rock said to start fi­nanc­ing rental-home in­vestors

The Pak Banker - - COMPANIES/BOSS -

Black­Rock Inc. is the latest com­pany plan­ning to fi­nance in­vestors who buy sin­gle-fam­ily homes, cap­i­tal­iz­ing on soar­ing rental de­mand as the U.S. home­own­er­ship rate sits at a five-decade low.

Black­Rock, the world's largest money man­ager, will buy loans from a net­work of part­ners that of­fer fi­nanc­ing to the firm's spec­i­fi­ca­tions start­ing as soon as next month, said two peo­ple with knowl­edge of the plans, who asked not to be iden­ti­fied be­cause the in­for­ma­tion is pri­vate. Its lend­ing part­ners also will of­fer funds to ren­o­vate homes that will be­come rental prop­er­ties, one of the peo­ple said.

Tara McDon­nell, a spokes­woman for Black­Rock, de­clined to com­ment on the in­vest­ment.

Black­Rock joins Cer­berus Cap­i­tal Man­age­ment, Blackstone Group LP and Colony Cap­i­tal Inc., which have been com­pet­ing to fi­nance smaller land­lords of the 14 mil­lion rental houses across the coun­try and bun­dle the loans into bonds to juice re­turns. The new type of debt may make even more money avail­able to sin­gle-fam­ily home land­lords as many Amer­i­cans strug­gle to get mort­gages and opt to rent in­stead.

"The mar­ket could cer­tainly bear to have more en­trants," said Ryan McBride, chief op­er­at­ing of­fi­cer at Colony Amer­i­can Fi­nance LLC, an af­fil­i­ate of Colony Cap­i­tal. "This is a largely un­tapped op­por­tu­nity in a huge po­ten­tial mar­ket."

In­vestors such as Alex Si­fakis, pres­i­dent of Jack­sonville, Florida-based JWB Real Es­tate Cap­i­tal, es­ti­mates he'll need about as much as $30 mil­lion a year to fund home pur­chases. In the past two years, he's bor­rowed $13 mil­lion from Colony and af­fil­i­ates of Cer­berus to fi­nance some of his firm's 430 rental houses. In­ter­est rates on the loans range from about 5.25 per­cent to 6.5 per­cent.

"More com­pe­ti­tion drives rates down," Si­fakis said. "The more peo­ple that are in mar­ket, the more I can lever­age them against each other."

In­vestors who buy at least 10 homes a year have spent about $110 bil­lion to ac­cu­mu­late more than 620,000 prop­er­ties since 2007, ac­cord­ing to prop­er­tyre­search firm Real­tyTrac. Rental de­mand has surged as many Amer­i­cans strug­gle with get­ting a mort­gage due to tight credit stan­dards, slow growth in wages and the lin­ger­ing ef­fects of the real es­tate col­lapse.

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