Mortgage giant Fannie Mae is getting into the single-family rental business in a big way.
The government-backed agency said it is going into business with private equity giant and major housing player Blackstone by backing $1 billion in debt. Blackstone's Invitation Homes filed for an initial public offering this week, and the Fannie Mae relationship was disclosed afterward. Blackstone is looking to raise $1.6 billion by selling shares to the public.
Fannie Mae, currently under government conservatorship, will back $1 billion in debt collateralized by rental homes owned by Blackstone.
Invitation Homes currently has a portfolio of about 50,000 single family rental homes, most of which it purchased during the foreclosure crisis. Invitation Homes, in the filing, reported $9.7 billion in property and $7.7 billion in debt. The homes that will go into the Fannie Mae are, according to sources, low risk, with very low loan-to-value ratios. This first-of-its-kind debt deal is something of a test in what is a growing and maturing single-family rental market.
Both Fannie Mae and Freddie Mac have long been big players in the multifamily apartment market. Following the foreclosure crisis, when investors bought thousands of distressed homes, the single-family rental market grew and now accounts for more than 50 percent of the rental market nationally. This is likely why Fannie Mae is testing this market with the first deal.
"This transaction is a great opportunity to continue to serve the growing single-family rental market," according to a statement from Fannie Mae. "Invitation Homes is a strong partner with deep experience managing a large volume of single-family rental properties. This transaction helps us gather data and test the market to ensure we are delivering the right solutions that meet the increasing demand for single-family rental housing across all demographics. Fannie Mae is committed to continuously finding better ways to meet the changing needs of families, whether that is through rental options or homeownership."
Poster Comment:
the Keiser report discusses this in the opening half.