NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six classes of certificates issued in the CoreVest American Finance 2018-1 (CAF 2018-1) securitization. This transaction will be the ninth multi-borrower, single-family rental (SFR) securitization issued in the US to date and the sixth issued by CoreVest American Finance (formerly Colony American Finance).
CAF 2018-1 is a $236.8 million multi-borrower SFR securitization that will be collateralized by 117 fixed-rate loans secured by first priority mortgages on 3,068 rental units in 2,517 income-producing single-family, 2-4 family, and multifamily properties. The properties are located in 29 states, with the largest five exposures comprised of New Jersey (16.8%), Florida (8.8%), Texas (7.5%), Illinois (6.3%), and California (5.7%). The loans have principal balances ranging from $0.5 million to $12.0 million for the largest loan in the pool. The five largest loans represent 18.7% of the initial pool balance, while the ten largest loans represent 32.0%.
KBRA used its Single-Family Rental Securitization Methodology to evaluate the transaction. The methodology leverages elements of KBRA’s commercial mortgage-backed securities and residential mortgage-backed securities 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. To determine loss given default, 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.
|Class||Rating||Balance (USD)||Rating Action|
|1 Notional balance. 2 To satisfy the US risk retention requirements, the transaction sponsor will retain an “eligible horizontal residual interest” consisting of the Class F, Class G, and Class H certificates, representing at least 5.0% of the fair value of all non-residual interests issued by the issuer on the closing date.|
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 in the report available here.
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