Single Family Securitization (Groundbreaking)
Blackstone Unit Strikes Landmark $230M Loan Securitization:
Law360, New York (March 27, 2015, 3:05 PM ET) --
A Blackstone Group LP fund affiliate announced Friday that it will soon break new ground with the first multi-borrower loan securitization deal for the emerging single-family rental sector, as it is the final leg of crafting a $230 million transaction. In the deal, which is expected to close in April, B2R Finance is putting together pass-through certificates backed by 144 mortgage loans tied to single-family rental properties, including condominiums, townhomes and more. The certificates will be rated by at least two rating agencies, the company said. “B2R is pioneering the first securitization of residential investor mortgages in the U.S. to grow its platform, increase the amount of capital available to our clients, and enable us to continue our leadership position in growing the asset class,” Jason Hogg, CEO of B2R Finance, said in a statement. A representative for B2R declined to comment further on the deal. The company, which was launched in late 2013 by funds managed by Blackstone Tactical Opportunities, provides residential buy-to-rent mortgages for single-family rental investors. The growing SFR market has been buzzing about this coming deal for months. Single-borrower SFR securitizations are relatively new themselves, with only a handful having hit the market so far, according to ratings agencies. Blackstone portfolio company Invitation Homes launched the first single-borrower SFR securitization in 2013 with a $480 million deal, where it pooled 3,200 homes and used them to secure a single loan that it then securitized. Several other opportunistic real estate investment companies, including American Homes 4 Rent and Colony Capital LLC, soon followed suit with their own deals. It was less than three months ago in January that Moody’s Investors Service finalized its methodology for rating single-family rental securitization. While it noted multi-borrower SFR securitizations had yet to be marketed, it noted what factors it would look to address in rating such deals. These included, for example, more extensive representations and warranties, similar to those in commercial mortgage-backed securities conduit or large loan deals. And “for multi-borrower SFR transactions, we will analyze performance information in a similar manner to single-borrower SFR transactions. However, in multi-borrower SFR transactions, credit quality will depend heavily on the quality and consistency of the transaction sponsor’s operations and flow of performance information,” Moody’s said. "A sponsor, working with other parties, can help ensure that the performance information the borrowers supply is timely and consistent in content and format," the ratings agency added. "We would expect to see such information both at closing and throughout the term of the transaction to monitor such transactions."