Blackstone’s success with Invitation Homes 2013-SFR1, the first securitization of cash flows from single family rental properties, has opened the floodgates to $5 billion in issuance for the asset class over 2014.
Over time the asset class is likely to become the second-biggest contributor to the growth of securitization markets in the US, according to a Deutsche Bank outlook report.
Deutsche was the lead bank on Blackstone's deal, which was structured as a single, floating-rate loan backed by the mortgages on 3,207 rental properties, all of which are managed by Invitation Homes, which is owned by Blackstone. Deutsche expects that the first deals of 2014 deals will similar in structure to Blackstone’s. Over the course of the year, however, conduit deals pooling the rental cash flows of multiple operators, could also emerge. It expecst such conduits would be sized in the $50 million to $150 million range.
Moody's Investors Service also expects to see more single-family rental operators tapping the capital markets next year through different structures, including conduit securitizations and through the formation of real estate investment trusts. "As this market migrates from mom and pop establishments to more institutional ownership, securitizations of SFRs will increase," the rating agency said in a report published this week.