Tampa Bay and orlando #homes included in #Blackstone's first #rental-backed security deal.

In the first-ever REO-to-rental securitization deal (REO stands for real estate owned) Blackstone is packaging rental income from single-family homes it owns into a pass-through security, similar to a mortgaged-backed security, and seeing who wants some. After New York, the reported $500 million deal’s lead manager Deutsche Bank , along with underwriters JPMorgan Chase and Credit Suisse, take the dog and pony show to Boston tomorrow and Los Angeles on Friday. Even with one rating agency, presumed to be Moody’s, supposedly bestowing the coveted AAA stamp of approval on the deal, investors may have a hard time figuring out if the new asset class is a trick or a treat. It’s easy enough to see why the world’s largest private equity company, after spending close to $7.5 billion amassing a portfolio of 40,000 foreclosed single-family homes it intends to rent, wants to get money out of the “trade,” as Reuters calls the deal. The new securities will likely include some of the homes that were foreclosed on in the resulting crisis. Investment groups like Blackstone targeted foreclosed and bottom-dollar homes to repair and rent to tenants. The average home included in the security is more than 25 years old, with three or more bedrooms and a pre-rehabilitation price of $149,000, ratings reports show. The average Blackstone-owned home in Tampa Bay, Lakeland and Sarasota cost $17,000 to renovate. Demand for the new bonds could spur investors to binge on more homes to fuel the securities. Seven investment groups have spent $800 million buying Tampa Bay homes since last year, though their buying slowed as home prices climbed. Blackstone has spent $7.5 billion buying 40,000 American homes, becoming the nation's largest single-family landlord. The New York private-equity firm's portfolio also includes SeaWorld, Universal Orlando, Hilton hotels and the Weather Channel. Hundreds of potential investors were expected to look over the deal during a road show of investor meetings this week in New York, Boston and Los Angeles. The deals are driven by institutional investors like banks and pension funds. Deutsche Bank, Credit Suisse and JPMorgan are marketing the security, called Invitation Homes 2013-SFR1 (the last part of which means "single-family rental"). Moody's Investors Service, Kroll Bond Rating Agency and Morningstar gave the deal's $280 million top slice, or "tranche," the highest rating, AAA.