American Homes 4 Rent, the largest publicly traded U.S. single-family landlord, said an affiliate plans to sell bonds backed by its rental properties.
The offering will begin this week, the Agoura Hills, California-based company said today in a statement. The sale will be the third issue ever of its type, following offerings of similar bonds backed by Blackstone Group LP and Colony American Homes Inc. rental homes.
Wall Street may sell $5 billion in bonds backed by rental homes this year, a market that may grow to as much as $20 billion annually as debt from smaller operators is aggregated into securities, according to Ryan Stark, a director at Deutsche Bank AG who led the structure and underwriting of the Blackstone transaction.
“We see the successful completion of a securitization as a positive catalyst for the sector,” Jack Micenko, an analyst with Susquehanna International Group LLP in New York, said in a May 2 note to investors. Micenko, who has a positive rating on American Homes 4 Rent shares, expects them to rise more than 15 percent over the next 12 months.
Private-equity firms, hedge funds and real estate investment trusts have spent more than $20 billion to purchase as many as 200,000 homes in the past two years, betting they can take advantage of rising demand for rentals and recovering property values after the biggest housing bust since the Great Depression.
Other landlords that have announced plans for securitizations include Starwood Waypoint Residential Trust, which is controlled by Barry Sternlicht and has $1 billion invested in 7,400 rental homes and non-performing loans, and American Residential Properties Inc., a Scottsdale, Arizona-based landlord with more than 4,000 homes.