ARMM Investment Vehicle 1, which finances single-family rental properties, is preparing a $322.6 million securitization of one loan secured by a collateral pool of 1,376 single-family rental residential properties.
The assets were sold to the transaction by Goldman Sachs Mortgage, and Morgan Stanley is the manager on the deal, according to the Asset Securitization Report's deal database. The trust balance consists of outstandings in nine classes of notes, including a $27.6 million, retained class G portion, according to Moody's Investors Service, one of the agencies assigning ratings to the notes.
Overall, the collateral has total leverage of 87.5%, which is lower compared with 99.0% of the previous transaction, the AMSR 2023-SFR2, according to Moody's ratings analysts. As for the pool's vacancy rate, just 6.8% stands empty, or 94 properties, according to Moody's. The rating agency added that 32 of those 94 empty homes had lease commitments that either started in August or were due to begin this month.
Among other pool characteristics, 66 tenants have been delinquent on lease payments by 30 days or more, translating to 4.8% of the pool. This is noticeably higher than the 2.2% 30-day-plus delinquency rate seen in the AMSR 2023-SFR2. Further, just 54 properties, or 3.9% of the pool, are occupied by section 8 tenants, and this is lower than the Section 8 concentration in the AMSR 2023-SFR2 deal, which amounted to 4.8%.
Overall, Moody's considers the multi-property loan as a credit strength. Such a loan benefits from lower cash volatility, because excess cashflow from one property can help support the debt service obligation of another property, ratings analysts from Moody's said.
DBRS Morningstar analysts also assessed the deal, and noted that the deal includes a payment-in-kind feature for the rated classes E-1, E-2, F-1 and F-2. Typical to single-borrower, single-family rental deals, the waterfall has straight sequential payments with reverse sequential losses. DBRS also notes that AMSR 2023- SFR3 allows for the discretionary substitutions of up to 1.0% of the number of properties in the pool, as of the closing date, as long as certain conditions are met.
Moody's assigns 'Aaa' to the $126.2 million, class A notes; 'Aa3' to the B notes; 'A3' to the class C notes and 'Baa3' to the class D notes. DBRS assigns 'AAA' to the class A notes; 'AA' to classes B and C; 'A' to class D; 'BBB' to classes E-1 and E-2; and 'BB' to classes F-1 and F-2.
