The Tricon Residential 2024-SFR1 Trust is preparing to issue $320.5 million in certificates, with a single loan acting as collateral for the transaction.
A pool of 1,299 single-family rental (SFR) properties is securing the one loan behind the certificates, which reduces cash flow volatility throughout the pool, according to ratings analysts at Moody's Investor's Service. SFR JV-HD LP has sponsored the loan, which carries a low leverage. That in turn can increase the loan sponsor's incentive to maintain the properties in good condition in a stressed economic environment.
Tricon Residential's capital structure will issue classes A, B, C, D and E notes, according to Moody's. Classes, A, B, C and D have an advance rate to Moody's value of 48.5%, 59.8%, 65.2% and 71.7%, respectively. Aside from the cash flow stabilization, another credit positive to the deal, TAH Operations is property manager to the portfolio, and has strong processes and controls, Moody's said.
The deal is slated to close on April 16, according to Asset Securitization Report's deal database.
DBRS Morningstar analysts, meanwhile, say that Tricon will repay the notes sequentially. The issuer loan-to-value ratio on classes A, B, C and D notes are 43%, 53%, 57.7% and 63.5%, respectively. Moody's analysts refer to this as the broker price opinion.
DBRS says Midland Loan Services is acting as servicer and special servicer.
Morgan Stanley, Deutsche Bank Securities and RBC Capital Markets are listed as lead manager and co-managers on the deal, DBRS said.
The deal has a number of credit challenges, including a lack of amortization, a low debt-service coverage ratio, and a high geographic concentration of properties into 12 metro areas, Moody's says. Further, the sponsor can voluntarily substitute up to 2.0% of the pooled properties over the life of the loan, and they don't have to pay an additional premium as long as certain conditions are satisfied.
DBRS assigns ratings of AAA, AA, A and BBB to the classes A, B, C and D notes, respectively, while Moody's assigns Aaa, Aa3, A3 and Baa3 to the A, B, C and D notes.
