Altisource Residential, a real estate investment trust, is securitizing a portfolio of 4,262 single family rental properties that it recently acquired from Amherst Holdings.

The deal is part of a seller-financed transaction, according to rating agency reports and a company press release. Amherst provided a financing equal to 75% of the $652 million purchase price. Amherst will also continue to manage the properties through its subsidiary, Main Street Renewal.

The deal, dubbed Amherst 2016-SFR1 Trust, will issue four tranches of notes with preliminary ratings from Moody’s Investors Service and Morningstar Credit Ratings. The senior notes, which benefit from 33% credit enhancement, are rated triple-A.

The lead managers are Nomura Securities, Goldman Sachs, Amherst Pierpont Securities, and Credit Suisse Securities

The notes are secured by a single loan secured by 4,262 single-family rental residential properties made to HOME SFR Borrower, a subsidiary of Altisource.

The trust’s properties are in 14 states, with the largest concentration by BPO value in Texas (32.1%). The largest metropolitan statistical area is Houston (13.8%), followed by Memphis, Tennessee (13.5%). Further, 6.0% of the properties by BPO value are in one ZIP code, 37086. This ZIP code represents La Vergne, Tennessee, which is in the Nashville, Tennessee MSA. Relative to previous single-family rental transactions, this is a high concentration for a single ZIP code.

Morningstar’s assumed base-case NCF is approximately $23.0 million, which is 38.2% lower than the underwritten NCF of $37.1 million.

Approximately 40.9% of the pool’s properties by BPO value are in HOAs. The borrower represents that there are no HOA delinquencies as of the cutoff date. The borrower is required to escrow HOA fees for properties where HOA fees are superior to and could extinguish a first mortgage lien.

As of the July 31, 2016, cutoff date, 6.5% of the properties by BPO were vacant.

The average year built for properties in this transaction is 1993. Upfront capital expenditures averaged $21,352 or 22.0% of the average purchase price.

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