Kroll Bond Rating Agency Assigns Preliminary Ratings to American Residential Properties 2014-SFR1

NEW YORK--()--Kroll Bond Rating Agency, Inc. (KBRA) has assigned preliminary ratings to five classes of American Residential Properties 2014-SFR1 (ARP 2014-SFR1) single-family rental pass-through certificates.

ARP 2014-SFR1 is a single-family rental (SFR) securitization that will be collateralized by a $342.7 million loan secured by first priority mortgages on 2,880 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. The underlying properties are one to four unit residential properties located in eight states, with the three largest state exposures representing 80.4% of the aggregate broker price opinion (BPO) value of the portfolio: Texas (36.9%), Arizona (29.1%), and North Carolina (14.4%). This is the first securitization issued by American Residential Properties, Inc.

The aggregate BPO value of the underlying collateral was $489.6 million, yielding an LTV of 70.0%. KBRA adjusted the BPOs, which yielded an aggregate value of $462.0 million. The LTV based on KBRA’s adjusted BPO value was 74.2%.

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 American Residential Properties 2014-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)     184,892,000     Preliminary
B     AA(sf)     35,976,000     Preliminary
C     A- (sf)     26,348,000     Preliminary
D     BBB+ (sf)     30,963,000     Preliminary
E     BBB- (sf)     40,015,000     Preliminary
F     NR     24,476,000     N/A
 

17g-7 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 that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found here.

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

Kroll Bond Rating Agency, Inc.
Analytical Contacts:
Daniel Tegen
dtegen@kbra.com, 646-731-2429
or
Keith Kockenmeister
kkockenmeister@kbra.com, 646-731-2349
or
Nitin Bhasin, CFA
nbhasin@kbra.com, 646-731-2334
or
Julian Ferdman
jferdman@kbra.com, 646-731-2379
or
Follow us on Twitter!
@KrollBondRating

Contacts

Kroll Bond Rating Agency, Inc.
Analytical Contacts:
Daniel Tegen
dtegen@kbra.com, 646-731-2429
or
Keith Kockenmeister
kkockenmeister@kbra.com, 646-731-2349
or
Nitin Bhasin, CFA
nbhasin@kbra.com, 646-731-2334
or
Julian Ferdman
jferdman@kbra.com, 646-731-2379
or
Follow us on Twitter!
@KrollBondRating