[quote=livinincali][quote=flu]I don’t see what the problem here is. Blackstone doesn’t seem to be cashing out and selling their portfolio. They were active in high distress areas and bought distressed homes primarily sfh around 200k or lower. If it all, it proves.
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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]
Yes, they *are* cashing out, but the homes will not belong to the bond investors. These are more like revenue bonds — it is only the rental payments that back these bonds. And I also have no doubt that CalPERS (and others) are going to be investing in these, if they haven’t already…and the union workers will be blamed, once again, for Wall Street’s scams.
They had initially planned to include only 1,700 properties…
The Journal, citing sources familiar with the proposed deal, says that Blackstone would bundle monthly rental payments on up to 1,700 of the homes it has bought.
…and have already doubled that number in just the past few months. While it is still a rather small percentage of their total portfolio, I imagine it will grow quite a bit over the next year or so.
Here’s an article from August 2012 about these securities, as discussed on this thread:
[The comments are the best part of that article, BTW; some pretty smart cookies there.]
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The value of these bonds is more affected by rents (which is what’s backing the bonds), rather than sales prices of these homes. A cynic would think that this is marking the ~top of the rent cycle. It also might mean that these large investors think that prices will still continue to rise, since they are entitled to the appreciation on home prices…unless they collateralize that, too (entirely possible).
