Blackstone owns approximately 32,000 single-family rental houses that it paid around $5.5 billion to buy. The next largest company in this business is American Homes 4 Rent which completed an initial public offering on Aug. 1 of 44.1 million shares for $16 a share.
Another publicly-traded rental housing company is SilverBayRealtyTrust (SBY). SBY is trading below its IPO debut in December of $18.50 a share and closed Thursday at $16.10.
BlackstoneGroup's smart real estate track record may help to reduce investor angst about this deal and the efficacy of keeping the underlying rental houses occupied and the residents paying rent on a timely basis.
The involvement of Deutsche Bank also makes sense as it has been one of the leading lenders to real estate companies who purchase foreclosed homes.One would think the fact that Deutsche Bank originated loans to BlackstoneGroup to the tune of more than $3.5 billion this year should make them suitable partners. For those who would like a better picture of how Deutsche Bank shares have done in the past 12-months I offer the following chart for your viewing pleasure. DB data by YCharts
Deutsche Bank's Return on Invested Capital cratered at the end of 2012 and has improved slightly so far in 2013. The teaming of Deutsche Bank with BlackstoneGroup on a new bond backed by house rental payments may help ROIC for both companies. Only time will tell on that score. But for those income-starved investors who may be tempted by the RBS products all I can say is remember the famous Latin words "Caveat Emptor" -- buyers beware! At the time of publication the author held no positions in any of the stocks mentioned. Follow @m8a2r1 This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV