Kroll Bond Rating Agency Assigns Preliminary Ratings to American Homes 4 Rent 2014-SFR1

NEW YORK--()--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.

                                 
Class               Rating               Class Principal
A               AAA(sf)               $270,396,000
B               AA+(sf)               $37,733,000
C               A+(sf)               $40,889,000
D               A-(sf)               $38,696,000
E               BBB(sf)               $62,286,000
F               BB+(sf)               $32,700,000
                           

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 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).

Contacts

Analytical:
Kroll Bond Rating Agency
Andrew Giudici, 646-731-2372
agiudici@kbra.com
or
Nitin Bhasin, 646-731-2334
nbhasin@kbra.com
or
Keith Kockenmeister, 646-731-2349
kkockenmeister@kbra.com
or
Michele Patterson, 646-731-2397
mpatterson@kbra.com

Sharing

Contacts

Analytical:
Kroll Bond Rating Agency
Andrew Giudici, 646-731-2372
agiudici@kbra.com
or
Nitin Bhasin, 646-731-2334
nbhasin@kbra.com
or
Keith Kockenmeister, 646-731-2349
kkockenmeister@kbra.com
or
Michele Patterson, 646-731-2397
mpatterson@kbra.com