One loan, secured by 2,121 single-family properties, will provide collateral for $617.5 million in residential mortgage-backed securities (RMBS) certificates, sold to investors through the Progress Residential 2025-SFR5 Trust.
The deal will issue class A through class G certificates through a structure of eight tranches, which includes a payment-in-kind feature for the class E, F1, F2 and G certificates, according to ratings analysts at Morningstar | DBRS. Progress will repay investors sequentially and absorb losses in reverse sequential order, DBRS said.
All the properties underpinning the loan have a total broker price opinion, or BPO, value of $620.6 million, with average monthly rental payments of $1,808, according to the rating agency. The properties are heavily concentrated in the Southeast, with Georgia (28.5%), Florida (16.9%), Texas (16.6%), Tennessee (15.0%) and Alabama (10.0%) accounting for the top five states.
Progress' repayment order depends on several factors, including debt service coverage ratio (DSCR) triggers. If the deal encounters a condition where it has insufficient funds to pay all current interest, and that includes the failure of a DSCR trigger, the amount of deferred interest can be added to the outstanding certificate balance, the rating agency said. Although interest can also be deferred, it could increase the transaction's outstanding balance by the deferred interest amount, according to DBRS.
Progress allows substitutions for up to 5.0% of the number of properties in the pool as of the closing date, if the substitution meets certain requirements. For instance, the property must be a single-family residential real property with a broker price opinion, or BPO value, of no less than the value of the property that it is replacing in the pool, DBRS said.
Midland Loan Services is acting as both service and special servicer on the deal, according to the rating agency.
DBRS assigns ratings of AAA, AA and A to classes A, B and C; BBB to classes D and E; BB to classes F1 and F2; and B to class G.
