Single family home rental properties located in Florida, Georgia and Washington State will secure the latest loan Blackstone’s Invitation Homes has up for securitization.
Invitation Homes 2015-SFR2, as the deal is called, is backed by a $637 million, five-year loan underwritten by J.P. Morgan, according to Kroll Bond Ratings Agency. The loan pays only on interest for its entire term.
A pool of 3,550 properties valued at $806.5 million secures the loan. Kroll adjusts the value of the properties to incorporate the total of each property’s purchase price plus renovation costs. Based on this calculation, it calculated that the pool is valued at $727.4 million with a loan-to-value (LTV) ratio of 87.5%, consistent with the first three single-family rental securitizations (IH 2015-SFR1, IH 2014-SFR2 and IH 2014-SFR3).
Most of the homes included in the pool are occupied, under 5% are unoccupied and 1.0% of the tenants were delinquent on their rent payments. Except for IH 2013-SFR1, all of the prior Invitation Homes transactions also included properties that were not fully leased at securitization. The occupancy rates for these transactions ranged from 94.4% to 95.8%. The rate of vacancy is something that credit rating agencies take into account when rating these transactions. Kroll for example stated in the presale report that it assumes up to a 10% vacancy rate in its analysis of a single-family rental portfolio, “whether or not they are fully occupied at the time of securitization”.
Rental cash flow for homes the pool is on average $1,691 per month, which is the third highest compared to all of the previous transactions. According to Kroll the prior 16 single-family rental deals had average monthly rents ranging from $1,187 to $1,807, with an average of $1,512.
Invitation Homes was formed in June 2012 as a subsidiary of Blackstone Real Estate Partners VII L.P. to acquire, refurbish, and manage rental properties. As of March 13, 2015, it and certain affiliates had invested in excess of $9.5 billion in its portfolio of more than 46,812 homes.
Last week, another Blackstone affiliate that lends to landlords, B2R Finance, launched what will be the first-ever multi-family securitization. The pool of collateral includes 144 mortgages totaling $230 million that are secured by single-family residential properties, two- to-four-unit properties, condominium properties, townhomes, multifamily properties and mixed-use properties.