Maintaining deal momentum as expected, single-family residential properties is supporting another mortgage-backed securities deal. The Progress Residential 2021-SFR7 Trust is expected to float about $365.6 million in notes.
Like previous Progress deals, the 2021-SFR7 Trust is secured by a single loan on first-priority mortgages in a pool of 1,414 single-family rental properties, according to DBRS Morningstar.
Bank of America Securities, RBC Capital Markets, and Wells Fargo Securities are lead managers on the transaction, on the sequential capital structure. The deal is expected to close on August 5.
Industry observers say they expect current market conditions to support healthy deal flow through the end of 2021.
In terms of deal characteristics, underlying loans in the Progress 2021-SFR7 has an average BPO $272,225 on homes that were typically built in 2004, according to DBRS. Monthly rental payments average $1,953 with 10 months remaining on their lease terms, on average.
Similar to most single-borrower, single-family rental RMBS deals, the capital structure here has straight-sequential payments with losses taken in reverse. If the deal hits certain low debt service triggers, however, interest payments to classes F and G can be deferred. That action will increase the outstanding balance of those certificates by the amount of the deferred interest.
Similar to other single-family rental deals, this Progress transaction includes an excess collateral release feature in which the borrower may, occasionally transfer any properties to obtain a release of any underlying property without a prepayment of the loan, or payment of any yield maintenance premium, either, DBRS said.
In terms of geographic concentration, Florida represents the state with the highest percentage of BPO, with 21.3%. Georgia follows, with 16.8%, and North Carolina with 9.2%, DBRS said.
By MSA, the top spot looks very different, with Phoenix accounting for the highest concentration by BPO, 21.3%, followed by Atlanta, with 16.8%, and Jacksonville, Florida, with 9.8%, DBRS said.
DBRS expects to rate the $128.9 million class A certificates ‘AAA’; the $40.4 million class B certificates ‘AA,’ the $19.2 million class C certificates ‘A,’ and the $22.1 million class D certificates ‘A’.
Subordinated certificates are likely to receive below-investment rate ratings.
