Progress Residential is marketing its seventh securitization of receivables from investor-owned, single-family rental homes in a $370.8 million, single-borrower transaction through a master trust.
Progress Residential 2017-SFR1 is backed by a single loan supported by the fund stream from 2,080 income-producing rental homes owned and managed by the Maryland-based real estate investment trust. According to presale reports, 719 of which have been rolled over from two prior Progress asset-backed deals that have been paid off.
The notes being sold include a $184.9 million Class A note series that has preliminary triple-A ratings from Kroll Bond Rating Agency, Moody’s Investors Service and Morningstar Credit Services.
The five-year, interest-only loan backed by the properties was originated by German American Capital Corp. The deal has the potential to be upsized to $458.6 million if enough investor demand develops, noted the reports.
The homes in the portfolio are spread among nine states, primarily in Florida (34.6% of the collateral pool value, which is based on brokerage-price opinion estimates of the aggregate home values), North Carolina (12.9%) and Georgia (11.8%). The total loan balance is estimated at 77.7% of the total BPO value of the portfolio.
Progress has done six prior securitizations, which also included rollover transactions. Progress Residential 2016-2, issued last December, rolled over more than 2,700 properties from its first transaction of 2015 that had been paid off.
KBRA noted in its report that the risk of early prepayments has become commonplace in SFRs. Of 15 securitizations industry-wide issued between November 2013 and February 2015, seven were repaid prior to maturity. Four of those were paid off with revenue capital outside of securitization cash flows. Another three of the 15 deals were refinanced.
KBRA reports a total of 29 SFR securitizations in the fledgling residential-mortgage backed asset class. None of have experienced any delinquency or special servicing with the underlying loans backing note issuances.
Progress, which acquires and manages single-family rental homes in 14 states, has a portfolio of more than 20,000 residences.