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.
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.