NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six classes of American Homes 4 Rent 2014-SFR1 (AH4R 2014-SFR1) mortgage pass-through certificates.
AH4R 2014-SFR1 is a single-family rental (SFR) securitization that will be collateralized by a $482.7 million loan secured by mortgages on 3,871 income-producing single-family homes. The loan backing the securitization will be a non-recourse, first lien, floating rate mortgage loan originated by Goldman Sachs Mortgage Company on the securitization closing date and funded with the proceeds from the sale of the certificates. The underlying properties are one- to four-unit residential properties located in five states (Florida, Texas, Georgia, Arizona, and Nevada).
KBRA used a hybrid analysis to evaluate the SFR transaction, which incorporated elements of both our commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (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.
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 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.
For details on KBRA’s analysis, see the pre-sale report: American Homes 4 Rent 2014-SFR1 Pre-Sale Report.
About Kroll Bond Rating Agency
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).