Many landlords have been constrained since they’ve deployed all their equity and would have to sell assets to buy more homes, according to Cisterna.
“A lot of our clients are capped between 25 and 100 homes, and with good loans these investors are going to be able to triple their holdings,” he said.
Cerberus Loans
Cerberus’s First Key has completed two loans, according to a person familiar with the business started by the New York- based investment firm. The company aims to provide $5 million to $100 million of financing to rental investors -- unable to secure credit lines from Wall Street -- who’ve also outgrown government-backed mortgage guarantors.
The loans typically have a 24-year term with a 6 percent to 7 percent interest rate and are secured by the real estate, senior vice president Eric Atlas said at a forum on single- family rental homes in Miami in May.
CapitalSource Inc., a Los Angeles-based bank with $8.5 billion in assets, has also closed two loans -- for $29 million and $29.5 million -- providing as much as 60 percent debt to owners of leased houses. Two other loans are in the underwriting stages, according to Chris Kelly, CapitalSource’s managing director overseeing commercial real estate.
“We’re trying to play in the middle,” Kelly said in a telephone interview. “The big guys get debt from investment banks. The smaller guys get it from local banks.”
Largest Buyers
The largest buyers have been able to access either public markets or bank-arranged credit lines to finance properties, which has helped them accelerate purchases as competition increases.
Blackstone has a $3.6 billion credit line from lenders led by Deutsche Bank AG. Apollo also received a $200 million facility from the Frankfurt-based lender and American Homes 4 Rent obtained a credit facility for up to $1 billion with Wells Fargo & Co. Silver Bay Realty Trust Corp., a real estate investment trust with more than 5,000 homes, got a $200 million loan in May from Bank of America Corp. and JPMorgan Chase & Co.