NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of preliminary ratings to six classes of Invitation Homes 2013-SFR1 mortgage pass-through certificates. Invitation Homes 2013-SFR1 is a securitization transaction that will be collateralized by a $479.1 million non-recourse, first lien, floating rate mortgage loan (Loan) that will be originated by German American Capital Corporation on the securitization closing date in November 2013 and funded with the proceeds from the sale of the certificates. The Loan is secured by the borrower’s fee simple interest in 3,207 one to four unit residential properties located in five states: Arizona, California, Georgia, Florida and Illinois. The Loan has a two year term with three, 12-month extension options and generally amortizes on a monthly basis in an amount equal to one percent per annum of the Loan’s outstanding principal balance on the origination date.
KBRA used a hybrid analysis to evaluate the SFR (single family rental transaction), which incorporated elements of both our CMBS and RMBS methodologies, as the underlying real estate contains commercial and residential characteristics. As the properties generate a cash flow stream from tenant rental payments, CMBS methodologies were used to determine the Loan’s probability of default (PD). To determine loss given default (LGD), KBRA assumed the underlying collateral properties would be liquidated in the residential property market. For details, see our pre-sale report: Invitation Homes 2013-SFR1
The Loan will be secured by first priority mortgages on the properties, and a grant of a security interest in all personal property of the borrower. KBRA considers the mortgage structure to be superior to a loan secured solely by an equity pledge because the trust will have a first priority lien and security interest in the single family residential (SFR) properties. Therefore, if the trust were to exercise remedies following a default, it would be able to acquire the properties, as opposed to having its recovery limited to the sponsor’s equity. The utilization of mortgages in this transaction was essential in assigning an ‘AAA’ rating.
The loan sponsor, Invitation Homes L.P. (Invitation Homes), was formed in June 2012 as a subsidiary of Blackstone Real Estate Partners VII L.P. (Blackstone). Invitation Homes owns more than 35,500 homes nationwide and is one of the leaders in SFRs in the U.S. The company, including through its affiliates, has invested over $5 billion since April 2012 to acquire and develop an effective platform for the management of SFR properties. The properties will be managed by THR Property Management L.P. a wholly-owned subsidiary of Invitation Homes.
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Invitation Homes 2013-SFR1 Preliminary Ratings |
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| Class | Rating | Initial Class Balance | ||||
| Class A | AAA(sf) | $278,700,000 | ||||
| Class B | AA(sf) | $34,300,000 | ||||
| Class C | A(sf) | $47,100,000 | ||||
| Class D | BBB(sf) | $31,500,000 | ||||
| Class E | BBB-(sf) | $46,010,000 | ||||
| Class F | BB(sf) | $41,527,000 | ||||
*Notional Amount
Related publications:
CMBS Property Evaluation Guidelines
U.S. CMBS Multi-borrower Rating Methodology
U.S. RMBS Rating Methodology, published January 9, 2012
Residential Mortgage Default and Loss Model, published January 9, 2012
About Kroll Bond Rating Agency
KBRA was established in 2010 by Jules Kroll to restore trust in credit ratings by creating new standards for assessing risk and by offering accurate, clear and transparent ratings. KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
