Unstructured Finance

It’s generally been thought the main exit strategy for Wall Street-backed firms that are buying distressed homes to rent them out, is to convert to a REIT and file for an IPO. That attempt to cash-out on the single-family home trade has obvious benefits for the big institutional buyers but risks for retail investors as the math behind the buy-to-rent model becomes increasingly suspect.

But there’s another potential exit strategy for the institutional buyers beyond converting to a REIT or flipping homes earlier than anticipated and that’s becoming a home lender.

In Las Vegas, where the institutional buyers have been quite active the past six months, there’s talk about firms like Blackstone Group eventually providing financing to prospective buyers looking to acquire one of their single family homes. Buyers like Blackstone won’t comment on speculation about their single-family home management subsidiaries becoming defacto mortgage lenders. But it makes sense, especially in the case of Blackstone, which now owns more than 25,000 homes nationwide and says it intends to hold onto the homes and rent them out for several years.

If the institutional buyers are serious about renting out homes as opposed to being fast-money flippers, becoming a source of financing for prospective buyers may be the best way to guarantee there will buyers in the future. The financing could be part of a rent-to-own strategy, or a way to lure potential homeowners who might have difficulty getting a mortgage from a more conventional lender. National home builders long have had their own mortgage operations to help enable first-time buyers to get themselves into a new home.

And if the appetite is right, any loans issued by the national home buyers could be bundled into securities–the next wave of residential mortgage backed securities.

The SkyBridge Alternatives Conference – the annual hedge fund blowout better known as SALT, is a month away. And the official agenda for the three-day bacchanal, which sees thousands of hedge fund investors, allocators and hedge fund hangers-on descend on Las Vegas in the second week of May, has been released.

Many regular SALT-goers will tell you, of course, that as the event has grown in popularity its official agenda has become but one part of the conference. A sideshow to goings-on inside the Bellagio are the unofficial meetings going on outside, in the hotel’s poolside cabanas.

But SALT gate-crashers – a growing group of people who don’t pay for tickets to the conference but rock up to the Bellagio to network poolside with SALT’s paying guests – will be disappointed to know that the cabanas are a costly and official part of the event this year. The bungalows were all scooped up by SALT organizers, according two people familiar with the plans, and offered to guests for $20,000 for duration of the conference, as part of a sponsorship package that includes branding and passes to attend the event.

Nordstrom Fail: One sign of Las Vegas' hard times is this failed Nordstrom store and accompanying shopping center that never advanced beyond the skeletal stage.

By Jennifer Ablan

Las Vegas had become the poster child of what many had pegged as the biggest casino during the real-estate boom, all which was engineered by cheap credit and a yearning for owning a piece of the American dream.

The economic toll of the financial crisis swept through towns and communities in terms of home foreclosures, devastated neighborhoods and half-built shopping centers and office complexes.