Lease expirations are up in collateral pools backing single family rental securitization and that could lead to higher vacancies and potentially lower cashflows, said Morningstar in a report published Friday.
Of the 17 single family rental transaction covered in the report, nine transactions have experienced an increase in lease expirations in April compared to January.
Properties do not tend to be vacant for greater than three to four months. However of the 230 vacant properties in ARP 2014-SFR1, 15.7% have been unoccupied for at least five months. CAH 2014-1 has 102 vacant properties as of April and the same percentage of properties that have been empty for five months or longer. These figures are slightly improved from March, when 17.6% of vacant properties in ARP 2014-SFR1 and 17.0% of vacant properties in CAH 2014-1 were unoccupied for at least five months.
SWAY 2014-1, which the rating agency looked at based on only five months of performance data, showed 14.2% of their empty properties have been vacant for at least five months.
For now deals are well supported and are performing well. “Vacancy rates generally remain low, cash flows remain sufficient to cover bond obligations, and the asset class mostly shows performance in line with its recent history,” stated Morningstar.
The delinquency rate remains below 1% in most deals except one, ARP 2014-SFR1, which continues to have the highest level of tenants with delinquent payments at 2.3%, up from 1.9% the previous month. However the deal has also exhibited fewer vacancies, at 8%, down from 8.3% in March and its peak of 10% in February.