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American Homes 4 Rent to issue bonds on single-family rentals

L.A.-area firm to issue bonds backed by rents on single-family homes
American Homes 4 Rent owns 20,000-plus houses nationwide
Bond sales could fund another wave of purchases of single-family rental homes by big investors

American Homes 4 Rent is heading to the bond market.

The Agoura Hills-based firm, one of the biggest players in the burgeoning single-family rental industry, said Tuesday that it plans to issue bonds through a subsidiary backed by a stream of rental income from some of its more than 20,000 homes.

Because the sale is a private placement, American Homes 4 Rent did not give an amount it's seeking to raise but said the bond sale will start this week.

American Homes 4 rent is the third big player in the single-family rental business to attempt to securitize its rental income. Blackstone Group and Colony American Homes have issued similar bonds, while other big buyers including Starwood Waypoint Residential Trust have said they plan to.

A small number of private equity firms, hedge funds and other big-money investors have spent more than $20 billion to buy at least 130,000 homes nationwide in the last few years with the intention of renting them out. Buying has slowed lately as home prices have climbed in much of the country. Wall Street analysts say securitizing rental income from existing property could help these companies buy more real estate.

Some tenant advocates say they worry that securitization could lead to more aggressive rent increases or lower levels of home maintenance as Wall Street-backed landlords push for higher profits. In a call with analysts Tuesday, American Homes 4 Rent chief operating officer said the company had begun experimenting this spring with 4% to 5% rent hikes on lease renewals in its stronger markets and seen "relatively little resistance."

Late Monday, American Homes 4 Rent said it had $77.3 million in revenue in the first quarter, up 19% from the same period last year. The company reported a net loss of $6.9 million, slightly larger than the $6.8 million lost last year. American Homes 4 Rent said it purchased more than 3,000 homes in the first quarter and is on track to buy at least 2,000 in the second quarter.

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