© 2024 Arizent. All rights reserved.

Single-family rental deals turn in mixed performances in recent months

Photo by Scott Webb

Rent growth had increased among single-borrower, single-family rental (SFR) securitizations and for vacant-to-occupied properties, and average vacancy rates had also increased in recent months, according to a performance summary of DBRS | Morningstar’s ratings of deals in the SFR segment.

The information looks back at recent months, giving a detailed property-level information about each rated securitization. Typically collateralized by a single promissory note representing one borrower, SFR deals see ongoing cash flow from rental payments and other tenant fees.

“As a result of the coronavirus pandemic, DBRS Morningstar expects delinquent rental payments and vacancies to rise,” the rating agency noted.

Blended rents increased to 8.3% on single-borrower, SFR securitizations in January, compared with 6.7% in December, according to the rating agency. Rent growth on vacant-to-occupied properties was 12.3% in December, a slight uptick from the 12.2% that the sector experienced in November.

Average vacancy ticked up as well, to 3.2%, from 3.1% in December. The Denver-Aurora, Colorado area had a vacancy rate of 4.1%, while the Las Vegas metro area had the highest blended rent growth at 11.9%. The St. Louis and Kansas City, Missouri metro areas had the lowest blended rent growth rates, at 3.7% and 3.9%, respectively.

In terms of delinquencies, the Chicago MSA had the highest delinquency rate, at 13.2%.

DBRS acknowledged that the ABS market would have to pass through a few more cycles before the full effect of the COVID-19 pandemic becomes apparent. It noted, however, that the loans backing multi-borrower SFRs might be more sensitive to disruptions in rent collections, compared with single-borrower SFR deals, the rating agency found.

As for performance among multi-borrower SFR transactions, delinquency performance was mixed and loosened slightly on the longer end of the timelines. There were 740 such loans under DBRS’s surveillance. Among loans that were 30- to 59 days delinquent, the number decreased to six from 10. Delinquencies were up slightly in both the 60- to 89-day delinquency bracket, and the 90-day plus bracket, however, increasing to five from four and to 16, from 15, respectively.

For reprint and licensing requests for this article, click here.
ABS Securitization
MORE FROM ASSET SECURITIZATION REPORT