Invitation Homes, a subsidiary of Blackstone Group, is back with its third single-family rental securitization of the year.
Invitation Home 2015-SFR3 is backed by a $1.2 billion floating-rate loan secured by mortgages on 7,265 income-producing single-family homes. The interest-only loan is structured with three 12-month extension options for a total term of five years.
It’s Invitation Homes’ seventh single-family rental transaction to date. Kroll Bond Rating Agency has assigned preliminary ratings to six classes of notes: $541.3 million class A pass-through certificates have an expected rating of AAA;’ $122 million class B certificates, $99.1 million class C certificates, $91.5 million class D certificates, $136.5 million class C certificates, and $153.2 million class F certificates have expected ratings of AA+,’ A-,’ BBB+,’ BBB-,’ and BB-, respectively.
The $60.2 million class G certificates serve as a risk retention class that is to be help by the loan sponsor, and has not been rated by Kroll.
JP Morgan Chase bank is the lead manager on the deal.
The underlying properties are located in 10 states, with the three largest state exposures (Florida, California, and Georgia) representing 61.2% of the total $1.5 billion aggregate broker price opinion (BPO) value of the portfolio. Kroll adjusts the value of the properties to incorporate the total of each property’s purchase price plus renovation costs, yielding an aggregate BPO value of $1.4 billion and loan-to-value (LTV) ratio of 88.7%. This LTV ratio is just slightly higher than the previous deal, which was calculated at 87.5% by the ratings agency.
The higher leverage in this transaction reflects less borrower equity and a higher risk of default.
In its presale report, Kroll says “the portfolio is comprised primarily of homes with three or more bedrooms, two or more bathrooms, and average estimated square footage of approximately 1,794 square feet.” With 7,265 properties, this issuance marks the highest number of properties for a SFR securitization to date.
The weighted average (WA) original term of in-place leases is 15.8 months, which is just over a month longer than the average of 14.6 months for the SFR transactions that were issued during the past year. The WA monthly rent for IH 2015-SFR3 is $1,630, which is slightly higher than the WA monthly rent of $1,513 during the past year.