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Amherst to Kick Off Single Family Rental Securitization

Amherst Holdings plans to market $400 million worth of bonds backed by single family rental (SFR) homes, according to Trepp.

The transaction, called ASFR 2016-1, will securitize two loans; each backing its own series of bonds that is expected by Moody’s Investor Service; Kroll Bond Ratings Agency and Morningstar. The deal is expected to be announced later this week.

The first loan backs $128.5 million of floating-rate notes. The class 1A notes have been assigned preliminary ratings of triple-A; the class 1B notes will be rated double-A; the class 1C notes will be rated single-A;  and the class 1D notes will be rated triple-B plus by the thre rating agencies. The class 1E notes will be rated triple-B minus by KBRA and Morningstar and KBRA alone assigned double-B minus ratings to the class 1F notes.

The second loan backs $252 million of floating-rate notes that are rated similarly to the first series of bonds. The senior notes from each series benefit from 54.9% credit enhancement. No information was available regarding the size of the Amherst owned portfolio of single family rentals securing the loans. Amherst did not immediately return a call to comment on the transaction.

Goldman Sachs is the lead manager on the deal.  The loans have a weighted average loan-to-value ratio of 75.8%. Goldman would not comment on the deal.

SFR deal flow, especially the large loan variety, halted last year when broader market volatility pushed out spreads on all kinds of asset-backed securities.  

Large loan sponsors typically have access to lines of credit that have allowed them to wait out periods of marekt volatility; still, many of these issuers maintain a large inventory of product that they own outright and may eventually securitize.

Also contributing to the slowdown in SFR securitizations at the end of last year was consolidation within the space. On Dec. 4 American Home 4 Rent, the largest publicly traded SFR landlord, agreed to acquire American Residential Properties – both have each issued securitizations.  AH4R completed its most recent deal, AH4R 2015-SFR2, in September; American Residential only issued one deal in 2014. 

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