NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to four classes of notes issued in the Colony American Finance 2016-1 (CAF 2016-1) securitization. This transaction is the fifth multi-borrower single-family rental (SFR) securitization issued in the US to date and the second issued by Colony American Finance.
CAF 2016-1 is a $255.0 million multi-borrower SFR securitization that will be collateralized by 85 fixed rate loans secured by first priority mortgages on 3,818 rental units in 3,301 income-producing single-family, 2-4 family, and multi-family properties. The properties are located in 30 states, with the largest five exposures comprised of Texas (20.3%), Florida (11.9%), Ohio (9.3%), Georgia (7.5%), and Tennessee (6.5%). The loans have principal balances ranging from $0.4 million to $24.3 million for the largest loan in the pool, Gorelick (9.5%), a 340 unit (340 properties) portfolio. The five largest loans, which also include Residential Rental (9.5%), Huber Heights (7.8%), Camillo I (7.3%) and Camillo II (5.8%), represent 40.0% of the initial pool balance, while the ten largest loans represent 55.0%.
KBRA used a hybrid analysis to evaluate this transaction, which incorporates elements of CMBS and RMBS methodologies, as the underlying real estate contains commercial and residential characteristics. As the properties generate a cash flow stream from tenant rental payments and the loans do not fully amortize, CMBS methodologies are used to determine the probability of default and refinance risk. However, since there is a broader demand for homes underlying SFR securitizations in the residential owner-occupied homes market, elements of RMBS methodologies are used to determine loss given default.
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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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 that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found here.
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