Colony Capital LLC’s Colony American Homes Inc. is planning to sell $558.5 million of bonds backed by rental homes it manages, the fifth deal in the new securitization market since November.
The transaction, Colony’s second, includes $291.2 million of bonds set to receive AAA grades from Morningstar Inc., according to a presale report yesterday from the firm’s credit-rating unit. The Scottsdale, Arizona-based firm issued $513.6 million of rental-home bonds in April.
Colony was “very pleased” with the terms of its debut offering, “which further validates single-family rental housing as an institutional asset class,” Richard Saltzman, chief executive officer of the firm’s Colony Financial Inc. (CLNY), which invests in the rental-home manager, said last month on a conference call. Colony American Homes also is working on potentially becoming a publicly traded company, he said.
Blackstone Group LP (BX) last year became the first among the hedge funds, private-equity firms and real-estate investment trusts that expanded in the rental business amid the U.S. foreclosure crisis to tap the securitization market. Its second sale last month was the fourth for such debt and brought total issuance to about $2.5 billion.
Colony’s latest deal is backed by 3,727 leased properties in seven states, according to Morningstar. JPMorgan Chase & Co. and Credit Suisse Group AG are managing the sale, it said.