Banks set to roadshow Blackstone home-rental bond


By Adam Tempkin

NEW YORK, Oct 24 (IFR) - Deutsche Bank, Credit Suisse and JPMorgan will begin marketing the first-ever bond backed by UShome-rental cashflows, a US$500 million trade for private-equitygiant Blackstone, next Wednesday.

The banks will meet with investors in New York on October30, and then visit Boston and Los Angeles the following twodays.

Deutsche bank is the lead structurer, while Credit Suisseand JP Morgan will be acting as joint leads for the transaction.

The deal, titled Invitation Homes 2013-SFR1, will receiveratings from Kroll, Morningstar, and Moody's. At least one ofthose ratings will be Triple A.

The deal will be secured by individual mortgage liens oneach underlying property rather than an equity pledge in theproperty-owning special purpose vehicle (SPV), allowing for thecreation of a so-called real estate mortgage investment conduit(Remic) structure, according to sources close to the deal.

Remics, which are also used in CMBS, allow for the poolingof a diverse set of loans from different originators and offerflexibility in assembling a security.

Rating agencies had preferred that mortgages were in placeas legal instruments in any potential REO-to-rentalsecuritization structure so that bondholders do not get shut outof payments in case competing liens were placed on anyparticular property.

Agencies cautioned that in the absence of a recordedmortgage, bondholders could be on the hook if an issuer/sponsorputs an SPV owning the homes into bankruptcy.

Therefore, despite the recording fees and administrativecosts involved with filing individual mortgages on eachproperty, the mortgage structure seemed the best route for thefirst single-family rental securitization deal, sources said.

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