Silver Bay also raised $245 million in December by selling shares to the public. The stock declined 1.2 percent to $16.79 at 9:59 a.m. in New York, down from the $18.50 offering price.
Natural Progression
“Lending to smaller aggregators of single family rentals is a sound natural progression,” Martin Lifschutz, managing director for real estate risk at Citigroup Inc.’s institutional clients group, said in an e-mail. “One of the main concerns has always been operational risk for those investors aggregating single family rentals nationally. By lending to smaller investors who tend to be in only one and two markets, there is less operational risk and more local market knowledge,” he said. The loans may also be included in securitized bonds, he said.
Still, B2R could struggle to get business without offering fixed-rate loans at a time rates are rising from historic lows.
Jimmy Levy, president of Miami-based PIA Group USA LLC passed on the B2R loan because of the floating rate.
“You definitely want fixed rates,” said Levy. “If there is going to be a hedge against inflation, you don’t want the interest rates to hurt you when they go up.”
PIA Group is seeking to more than triple its 500-home portfolio in the next 3 1/2 years with the help of financing.
“I’m not sure we’ll get there, because the voracity of the investors is huge,” Levy said.
Potential Returns
While investor buying has pushed up prices, home values are still 26 percent below their 2006 peak and the addition of debt could increase potential returns for landlords.