Waypoint Real Estate Group Gets $65 Million Loan from Citibank (NYSE:C)

on Sep 18, 2012

Waypoint Real Estate Group LLC, an Oakland-based investment firm acquiring foreclosed homes to turn into rentals, has secured a $65 million (£40 million) loan from the American multinational financial services corporation Citigroup Inc. (NYSE:C) to help expand its properties portfolio. A spokesman confirmed the loan on 17 September, 2012, following a report on 16 September, 2012 in The Wall Street Journal, which also cites sources saying that the real estate group is working with Citi on a long-term financing strategy which is expected to close in the coming weeks.

Investors and bankers said that Waypoint’s deal with Citigroup (NYSE: C) is the first one in the industry to tap the debt markets. Commenting on the news, they also said that such a strategy would allow investment firms to lower the cost of financing additional property purchases and expand their portfolios at a faster pace.
This recent deal between the real estate group and the lender also may lead to a fresh development in the market involving the creation of a new type of security loan backed by home-rental payments. Similarly to bonds backed by assets like mortgages, bankers are looking into the opportunity of pooling the rents of the numerous tenants of previously foreclosed-properties and selling the income as a bond to investors as certain return based on the income the properties produce. This financial instrument would help investors like Waypoint which are focused on foreclosed home acquisitions repay their lenders quickly while availing of more funds which could then be used to purchase more properties.