Blackstone launches buy-to-rent lending platform

 The New York-based firm has formed a new business to provide mortgages for small- and medium-sized investors in the single-family rental market.  

The Blackstone Group, currently the largest owner of single-family rental properties in the US, now is getting into the lending side of the niche strategy. The New York-based alternative asset manager has launched B2R Finance to originate loans for residential buy-to-rent investors, with the potential to lend more than $1 billion in the space over the next several years.

The new business is expected to originate fixed- and floating-rate loans ranging from $500,000 to $50 million, targeting borrowers with portfolios of five to 500 single-family rental homes nationwide. It eventually plans to securitize the loans, which will have terms of five to 10 years.

Blackstone will make the initial investment in B2R through its Blackstone Tactical Opportunities fund and expects additional third-party capital to be raised through the securitization market and other investors. The firm is launching B2R through the Tactical Opportunities fund, rather than its Blackstone Real Estate Debt Strategies fund, because the latter vehicle primarily is focused on commercial real estate debt and typically originates larger loans than those that would be issued through B2R.

B2R will be a separate business from Blackstone’s single-family rental platform, Invitation Homes, which has invested more than $7 billion in the acquisition of 40,000 homes primarily through its latest global real estate opportunity fund, Blackstone Real Estate Partners VII. Earlier this month, Blackstone sold the first bonds to be backed by US rental homes on behalf of Invitation Homes, with Deutsche Bank acting as the underwriter in the transaction.

Blackstone also has hired a senior management team to oversee the new business. John Beacham, who most recently was joint head of single-family rental home finance at Deutsche Bank, will head the platform as B2R’s president. Beacham has overseen the origination of more than $5 billion in single-family rental mortgages during his 17 years of finance experience.

Meanwhile, Jeff Tennyson, a 20-year veteran of the residential mortgage industry, will act as chief operating officer. He previously served for 10 years as the chief executive of EquiFirst, a large wholesale residential lender.

“We saw a gap in the market where there was a lack of lending products for smaller investors looking to finance their single-family home portfolio,” said Beacham in a statement. “Few financing sources currently exist for this very significant pool of investors, and B2R solves that problem.”