Two thousand six hundred single-family properties funded by one loan will secure $891.9 million in mortgage-backed securities, from the Invitation Homes 2024-SFR1 transaction.
Invitation Homes Operating Partnership and SFR Javelin Venture are the loan sponsor, and the securitization sponsor, respectively, according to analysts at Moody's Ratings. Invitation Homes is the guarantor under the limited warranty, while SFR Javelin will retain the class G piece to satisfy the risk retention rules. The deal will issue notes through seven tranches of class A, B, C, D, E, F, and G certificates. The collateral loan is a five-year, fixed rate loan, the rating agency said.
Deutsche Bank Securities, BofA Securities, Goldman Sachs and Morgan Stanley are lead manager and co-lead manager on the deal, which is expected to close on September 5. The Asset Securitization Report's yields will range from 4.9% on the AAA notes to 7.6% on the BB rated notes.
DBRS Morningstar also rated the notes, saying the properties are distributed across eight states and 29 metro areas around the U.S., something that Moody's says is a potential credit strength. The average allocated loan amount is $317,328, Moody's said.
The notes benefit from credit support ranging from 44.8% on the class A notes to 7.5% on the class F notes.
Also, Moody's considers Invitation Homes Operating Partnership to be a strong sponsor.
Among the credit challenges, however, is the lack of amortization on the loans, and the loans are heavily concentrated among states and MSAs. By broker price opinion, 20% of the loans are in the Phoenix-Mesa-Scottsdale area, followed by 16% in the Charlotte-Concord-Gastonia area.
Yet another credit issue is a multi-tier debt service coverage ratio (DSCR) test, and a payment-in-kind feature for the class E and F tranches. The payment in kind certificates can receive partial interest even after the multi-tier test kicks in, Moody's said. But the rating agency raised concerns about what would happen in a scenario where available cash in the cash collateral account can be lower.
Moody's assigns ratings of Aaa, Aa1, A3 and Baa3 to the A, B, C and D tranches. DBRS assigns AAA, AA and A to the classes A, B and C notes; BBB to the D and E notes; and BBB to the class F notes.
