Hearing the term "securitization" and Wall Street in the same sentence might make some people nervous. That goes double when it involves the place that you live in. Blackstone Group, a private equity firm that just completed a multi-billion dollar sale in New York, has been on a rental property buying spree, taking advantage of low prices to pick up $8 billion in property across the country, including 1,300 homes in Chicago and Cook County. The company is also grouping these rental properties together via securitization schemes reminiscent of those that led to the housing bubble six years ago.
Collectively referred to as Invitation Homes, the Blackstone rental properties have been the subject of investigations that paint the corporate giant as a terrible absentee landlord, impossible to contact and unwilling to initiate needed repairs. It's typical "worst-landlord" fare including broken air conditioning in sweltering heat, vermin infestations, shoddy quick fixes that don't last. Invitation/Blackstone responded by saying they're stabilizing neighborhoods and providing affordable rental property. According to an expert quoted by DNAinfo, it's all about the business plan — is Blackstone looking for long-term value and aiming to resell the property later, or are they looking to quickly maximize profit? It doesn't look like Wall Street is leaving the rental game anytime soon; after Blackstone sold their first $479 million bond backed by rental payments last November, the competitors moved to set up their own.
— Patrick Sisson
·Here's What Happens When Wall Street Builds a Rental Empire [Huffington Post]
·Wall Street's Hot New Financial Product: Your Rent Check [Mother Jones]
·Wall Street is Chicago's New Landlord [DNAinfo]