Blackstone's B2R Finance

Blackstone Group has jumped into the mortgage finance field, targeting small to medium-sized borrowers of single-family rental properties, a market generally considered to be underserved. Known as B2R Finance, the company will originate loans ranging from $500,000 – $50 million, with a minimum requirement of 5 properties, minimum loan size of $500,000 and minimum eligible property value of $50,000.

John Beacham, president of B2R Finance was quoted as saying, “This is a very large market with a lot of opportunity to make a significant volume of loans. It has the potential to be north of $1 billion within a relatively reasonable amount of time.”

Eligible properties listed on the B2R Finance website include: Single Family Residences, Condos, Townhomes and 2-4 Unit Properties.

The loan products currently provided have terms of 5 and 10 years at floating and fixed rates, amortized over 30 years. Maximum loan-to-value ratios range from 60-75% and the minimum DSCR (debt coverage ratio) is 1.25x.

B2R’s nationwide lending program could really open up the doors for smaller investors who want to expand their holdings but have traditionally had limited borrowing ability. Fannie Mae and Freddie Mac limit the number of mortgages to one investor at 10. Alternative sources of funding like portfolio lenders, with a healthy appetite for lending to individual investors who are looking to build up their real estate portfolios, aren’t always easy to come by.

So, why would Blackstone create B2R Finance to fund their competition?

First, consider that the six largest institutional investors like Blackstone have collectively poured upwards of $15 billion into the single-family home rental market, buying at least 90,000 homes in the past few years, according to Deutsche Bank. A drop in the bucket when you consider that the US …read more