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TheStreet Open House

Be Ready for Renter-Backed Bonds and Meet the Beneficiaries

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 ChartDB 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.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial editor, he specializes in unique investment strategies, overlooked stock investments, energy and resource companies, precious metals, emerging growth companies, the prudent use of option strategies,real estate related opportunities,wealth preservation, money-saving offers, risk management, tax issues, as well as "the psychology of investing". Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.
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