Blackstone Group (BX) fourth-quarter earnings came out this morning and show a huge jump in profit compared to last year.

Much of that is due to its investments in hotel IPOs, but its activity in REO-to-rental is also particularly notable.

The earnings reveal that Blackstone is reaching nearly $1 billion worth of REO-to-rental assets under management, via subsidiary Invitation Homes.

Now holding $912 million worth of properties, the earning report cites improving real estate fundamentals for contributing to its profit.

"I am very pleased with our fourth-quarter results, which capped a record year for Blackstone. Strong growth and investment performance across all of our businesses drove record full year revenues of $6.6 billion, up 63% year-over-year, and economic net income of $3.5 billion, up 76%," said Stephen Schwarzman, chairman and chief executive officer.

"These investments provide a good illustration of how our long-term fund structures benefit our investors, and how our patient approach toward improving assets can ultimately drive better earnings growth and fund performance," he added. "We ended the year with a record $266 billion in total assets under management, up 26% year-over-year."

Blackstone spent the past two years building its empire of single-family rental homes, spending $7.5 billion to acquire 40,000 houses.

Now, the private-equity firm is selling bonds backed by lease payments, which is a step in a new direction for the housing and the structure finance industry.

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