NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency, Inc. (KBRA) has assigned preliminary ratings to six classes of Invitation Homes 2015-SFR1 (IH 2015-SFR1) single-family rental pass-through certificates.
IH 2015-SFR1 is a single-family rental (SFR) securitization that will be collateralized by a $540.9 million loan secured by first priority mortgages on 3,072 income-producing single-family homes. The floating rate loan will require interest-only payments and have a two-year term with three 12-month extension options. This transaction is the fifth securitization issued by Invitation Homes.
The underlying properties are single-family homes located in ten states, with the three largest state exposures representing 58.9% of the aggregate broker price opinion (BPO) value of the portfolio: Florida (32.8%), California (14.3%), and Georgia (11.8%). The aggregate BPO value of the underlying homes was $685.1 million, yielding an LTV of 78.9%. KBRA adjusted the BPOs, which yielded an aggregate value of $608.4 million. This represents an 11.2% haircut to the nominal BPO value. The resulting LTV based on KBRA’s adjusted BPO value was 88.9%.
KBRA utilized its Single-Family Rental Securitization Methodology to evaluate the transaction. The methodology leverages elements of KBRA’s commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (RMBS) criteria due to the fact that the collateral underlying an SFR transaction has both 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 preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.
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All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found here.
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