"We firmly believe that the US residential real estate market has bottomed and that Hovnanian is uniquely positioned to capitalize on the recovery,” says Doug Ostrover, a founding partner of GSO, in a joint statement by the companies.

So far, the companies announced, GSO has closed on six parcels that encompass 620 lots; the total cost of acquiring the land and financing the future development totals $65 million. Over the next six months, the agreement calls for the companies to complete another $60 million land development transaction under the same terms.

Also, GSO increased its equity stake in Hovnanian by exchanging $15 million in unsecured notes for more than 3.8 million shares of Class A common stock. The cost of Hovnanian shares has been on the rise recently, up to $2.83 last week.

Ara Hovnanian, chairman and CEO of Hovnanian, says the partnership “creates an exciting investment opportunity for both sides.

“The GSO partnership allows us to take advantage of attractive land opportunities using outside capital, thereby preserving our cash position, and, at the same time, affording us the potential for enhanced returns,” Hovnanian continued.

GSO’s Ostrover said his company views the agreement as a first step in a long-running partnership.

GSO’s parent, Blackstone, has reportedly invested a total of $250 million in another housing scheme, buying up foreclosed homes – mostly in the west and Florida – that could be leased and managed in bulk, possibly by a real estate investment trust established for the purpose.

The news follows Blackstone's big exit in the office sector. As reported last week, the private equity giant is planning to put 100 buildings worth $22 billion on the sales block.