Kroll Bond Rating Agency Assigns Preliminary Ratings to Tricon American Homes 2016-SFR1

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to five classes of Tricon American Homes 2016-SFR1 (TAH 2016-SFR1) single-family rental pass-through certificates.

TAH 2016-SFR1 is a single-borrower, single-family rental (SFR) securitization that will be collateralized by a $382.5 million loan secured by first priority mortgages on 3,444 income-producing single-family homes. The fixed-rate loan will require interest-only payments and have a five-year term. TAH 2016-SFR1 will be the second securitization issued by Tricon American Homes.

The underlying properties are single-family homes located in nine states, with the three largest state exposures representing 60.0% of the aggregate broker price opinion (BPO) value of the portfolio: Texas (35.0%), California (13.0%) and Florida (11.9%). The aggregate BPO value of the underlying homes was $504.6 million, yielding an LTV of 75.8%. KBRA adjusted the BPOs, which yielded an aggregate value of $451.4 million. This represents a 10.5% haircut to the nominal BPO value. The resulting LTV based on KBRA’s adjusted BPO value was 84.7%.

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.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled Tricon American Homes 2016-SFR1, which was published today at www.kbra.com.

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.

Class     Rating     Balance (USD)     Rating Action
A     AAA(sf)     $162,748,000     Preliminary
B     AA(sf)     $40,371,000     Preliminary
C     A-(sf)     $32,802,000     Preliminary
D     BBB+(sf)     $21,448,000     Preliminary
E     BBB-(sf)     $52,987,000     Preliminary
F     NR     $52,988,000     N/A
G     NR     $19,124,000     N/A

Representations & Warranties Disclosure:

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 set forth in the offering documents that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found here.

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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
Daniel Tegen, 646-731-2429
dtegen@kbra.com
or
Akshay Maheshwari, 646-731-2394
amaheshwari@kbra.com
or
Ashish Khattri, 646-731-2421
akhattri@kbra.com
or
Nitin Bhasin, CFA, 646-731-2334
nbhasin@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Daniel Tegen, 646-731-2429
dtegen@kbra.com
or
Akshay Maheshwari, 646-731-2394
amaheshwari@kbra.com
or
Ashish Khattri, 646-731-2421
akhattri@kbra.com
or
Nitin Bhasin, CFA, 646-731-2334
nbhasin@kbra.com