Progress Residential plans to tap the securitization market with a deal backed by a $438 million, five-year loan that pays only on interest, which is secured on a pool of 3,317 single-family rental homes.
With this latest transaction, called Progress Residential 2015-SFR2, the issuer will have a total of three securitizations outstanding, each structured with either a fully extend term of five years or a fixed term of five years.
“This could potentially result in Progress having approximately $997.4 million of securitized debt coming due from the end of 2019 to mid-2020, assuming they exercise all their extension options in the related transactions,” stated Kroll Bond Ratings Agency in a presale report. “The concentrated debt maturity profile may result in increased financial stress on the company”.
Deutsche Bank, Goldman Sachs and BofA Merrill Lynch are the led managers.
The issuer will offer $230 million of triple-A rated class A notes that benefit from 47.6% of credit support, $42.4 million of double-A rated class B notes that benefit from credit enhancement of 37.9%, $35 million of single-A plus rated class C notes that benefit from 30% credit enhancement, $30 million of triple-B plus, class D notes that benefit from 23.1% credit support, $53 million of triple-B rated, class E notes that benefit from 11% credit support and $48 million of double-B minus rated, class F notes. Morningstar and Kroll assigned preliminary ratings to the deal.
Progress’ 2015-2 transaction pools 3,317 properties located in nine states, with the largest concentration by broker price opinion value in Florida (36.2%). The largest metropolitan statistical area, or MSA, is Atlanta, GA (14.0%), followed by Tampa, FL (13.9%), according the Morningstar presale report.
Only 0.5%,by BPO value of the properties, in the PRD 2015-SFR2 transaction were vacant.
Progress is a private equity investment firm dedicated to the acquisition, leasing, and management of single-family residential properties throughout the U.S. The company was launched in September 2012 and is managed by a subsidiary of Pretium Partners, LLC, which was founded by Donald Mullen, Jr. and Curt Schade in 2012.
As of March 31, 2015, Progress had invested in excess of $2.2 billion in its portfolio of approximately 13,300 homes. The portfolio is comprised exclusively of single-family homes located in 26 markets across 11 states.