With the exception of a fledgling Defence Department housing deal by Westpac, major Australian institutions tend to give residential real estate investment a very wide berth, leaving it to the “mums and dads” with their insatiable love of negatively-geared bricks. (And that in itself should at least make small investors wonder about the wisdom of being outrageously overweight in housing.)

Babcock and Brown is certainly going against the trend, then, by taking a $1 billion plunge on a residential rental portfolio, a bet made all the braver by being in the United States where a key economic concern is a teetering and oversupplied housing market.

What the Oz describes as 8,180 “low-rent residential apartments” is hardly the stuff of glitzy financial engineering normally associated with B&B, but it takes the firm’s total US apartment portfolio to some 28,000 – about 40% of them in Texas.

The latest acquisition is BNP Residential Properties, a listed company for which B&B is paying a 39% premium over its last traded share price. The apartments have an average age of 14 years and an initial yield of just 3.8% – a laughably low figure for any normal property trust – but according to B&B the transaction “reflects the ongoing development of Babcock & Brown’s real estate business model away from pure investment to the establishment and growth of asset management and investment platforms”.

I think that means they think they think they can find a way to make money out of it. The bet seems to be that faltering US housing prices won’t crash, meaning many people will have to keep renting as they can’t afford to buy. It’s a big and growing bet on such a low yield.