A Pretium Partners affiliated real-estate investment trust is sponsoring a $989.3 million single-family rental transaction, months after closing on its acquisition of Front Yard Residential Corp. and its Progress Residential affiliate.
Progress Residential 2021-SFR2 is a single-loan transaction backed by mortgages for 5,421 single-family residential (SFR) homes that the Pretium Partners REIT affiliate owns across 12 states and 34 metropolitan statistical areas, according to presale reports from Moody’s Investors Service and DBRS Morningstar.
Pretium and Ares Management closed on the $2.5 billion takeover of Front Yard in January, which included the Progress Residential property-management platform. The deal, announced in October, bolstered the continued growth of institutional investment of single-family residential properties. The consolidation also resulted in taking private the former publicly traded Front Yard.
The transaction includes a wide of homes, with broker-price opinion (BPO) values ranging from $65,000 to $650,000. The homes have an average age of 28 years, although the range of original construction of the properties is between 1898 and 2018.
Monthly rents are between $769 to $3,349 with average monthly rental prices of $1,397, according to the ratings agencies. The average original lease term is 12.9 months.
Only 2.5% of the homes are vacant.
Under terms of the deal, Pretium’s affiliated REIT can substitute up to 5% of the properties that meet pool criteria as a detached single-family rental or condo/townhome, be occupied and carry a BPO value no less than the value of the property it replaces. Based on other certain conditions, up to 35% of the properties can ultimately be replaced in the pool.
The deal features 10 classes of notes, including a $354.07 million Class A senior tranche with preliminary triple-A ratings from DBRS Morningstar and Moody’s.
Lead managers include RBC Capital Markets, BofA Securities, Credit Suisse Securities, Goldman Sachs, Morgan Stanley, and Deutsche Bank.
