The Blackstone Group L.P. (BX): Are Single Family REITs for Real?

So it has a relatively stable business today but also has a little room to grow the rent roll. In addition, it provides management services for another 600 properties owned by others, a relatively reliable sideline. The company hasn’t announced a dividend yet, but investors shouldn’t expect much on the income front right now. This is really a growth play.

More Growth

Silver Bay Realty Trust Corp (NYSE:SBY) has a portfolio of around 3,400 homes across Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio, and Texas. That said, about half of those properties were vacant at the start of the year. That makes the REIT more risky, but also provides a great deal of internal growth potential. Indeed, all management needs to do is rent out the half of the portfolio that’s empty and it can improve results by 50%.

The foreclosed homes it owns often need a lot of repairs, so that’s no slam dunk. But, it does suggest more of a growth opportunity than American Residential Properties Inc (NYSE:ARPI) offers. Silver Bay Realty Trust Corp (NYSE:SBY) recently initiated its dividend at a mere penny a share. That’s little more than a token and investors shouldn’t be expecting much more in the near term.

It’s About the Market

Investors interested in this space should consider an investment as “getting in on the ground floor” of a new market. There are lots of risk, and the big returns could be a few years away. That said, for more aggressive investors, The Blackstone Group L.P. (NYSE:BX), Silver Bay, and American Residential all offer access to a market that simply didn’t exist before. That’s not only exciting, but based on the investors entering the space, a big potential opportunity.

The article Are Single Family REITs for Real? originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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