Invitation Homes is refinancing another two single-family rental securitizations originally issued in 2015, and it’s cashing out equity in the process, according to rating agency presale reports.

The properties securing these two transactions, Invitation Homes 2015-SFR1 and Invitation Homes 2015-SFR2, will be bundled into collateral for a new transaction called Invitation Homes 2018-SFR1.

The new deal will be backed by a $1.06 billion loan that is secured by first-priority mortgages on 5,614 income-producing single-family homes. The collateral includes roughly 45.3% of the properties from IH-2015-SFR1 and 54.7% of the properties from IH 2015-SFR2. Both these deals are expected to pay off in full when the new transaction closes.

Invitation Homes 2017-SFR2 single family rental portfolio substitution

The new loan, which was underwritten by JPMorgan Chase, increases the amount of debt on the rollover homes from $972 million to $1.1 billion. Despite this, the loan-to-value of the properties has decreased since the prior securitizations from 78.9% to 70% primarily because of their value appreciation, according to Kroll Bond Rating Agency.

The new loan will pay only interest, and no principal, for its entire term; there is an initial term of two years with five 12-month extension options, for a possible total of seven years.

Both Kroll and Moody's Investors Service expect to assign a triple-A rating to the senior tranche of notes to be issued in the new transaction.

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