They aren’t cashing out in terms of selling the properties on the open market. They are cashing out in the sense that they are transferring their personal ownership to investors buying the bonds. Blackstone no longer owns the properties, the bond holders own the properties. The bond asset prices are priced at the newly appreciated homes belonging to the portfolio. It’s highly likely Blackstone is selling the crappy part of the 41K portfolio to a bunch of unsuspecting investors because the rental market is hot and appreciation is good right now. Just like the banks we’re selling garbage MBS, the rental market investors are doing the same thing.
Will this effect the price of your San Diego home? Probably not. The portfolio probably contains a bunch of junky properties in Stockton, Phoenix, Las Vegas and some Miami condos for good measure. The point is that Blackstone is betting the rate of appreciation in rents and house prices is going to slow down and they are going to unload while the getting is good.[/quote]
I don’t think this is what they’re doing. It looks like a straight securitized bond offering. Appreciation of the properties belongs to Blackstone (or their subsidiaries). What they’ve created is a new form of collateralized mortgage obligations, where the security is both the properties and the cash flow. (I don’t see how that’s a lot different than previous generations of CMO’s.) They bought the properties for cash and have now financed the properties and pulled cash out, on a small percentage of the properties they bought.
If you look at the charts in the link, the biggest chunk of properties that secure this offering are in AZ. Probably the west valley in Phoenix. (They’re NOT junk properties. They are properties that experienced some of the biggest drops in values 5 years ago.) They bought very little in the East Valley. Next largest chunk is in CA, though I suspect very little of that is in San Diego. The Stockton area is my guess. Next was FL and GA. Oddly, nothing or near nothing in NV.
