Invitation Homes is back on the single-family rental scene with its third securitization, according to a presale report published today by Kroll Bond Rating Agency.
The deal, Invitation Homes 2014-SFR2, is collateralized by a single $720 million loan secured by mortgages on 3,750 residential properties. The properties are located in or near 28 Core Based Statistical Areas across 10 states. The top three states represent 77.8% of the portfolio balance and include California (36.5%), Florida (33.1%), and Georgia (8.2%). The portfolio is comprised of homes primarily with three or more bedrooms, two or more bathrooms, and an average estimated square footage of 1,906 square feet.
The floating-rate loan will require interest-only payments and will have a two-year term with three 12-month extension options.
Seven tranches of notes will be issued, including a $322.58 million senior class provisionally rated AAA’ by Kroll. The $78.79 million class B notes and $69.41 million class C notes received AA+’ and A’ preliminary ratings, respectively.
Invitation Homes’ previous deal, the $1.0 billion Invitation Homes 2014-SFR1, was completed in May. It was backed by 6,473 properties. Both the 2014-SFR1 and 2014-SFR2 deals offer properties with average ages that are in line with Invitation Homes’ first issuance, Invitation Homes 2013-SFR1—26 and 28 years old, respectively.
Neither the 2014-SFR1 nor 2014-SFR2 transaction provides amortization. Kroll views this as risky because interest-only loans have a higher risk of default at maturity.
Headquartered in Dallas, Texas, Invitation Homes was founded in 2012 as a wholly owned subsidiary of Blackstone Real Estate Partners to establish an institutional presence in the single family rental space. Invitational Homes has acquired more than 44,000 homes in less than two years, investing approximately $8.7 billion in single-family residential properties nationwide. However, while Invitation Homes is one of the largest single-family rental entities, its operating history is limited. Many of the company’s homes have been leased for less than one year, so it is uncertain how successfully Invitation Homes’ properties will be managed for an extended period of time.
Invitation Homes 2014-SFR2 will be the seventh single-family rental securitization on record.