Tricon American Homes is preparing to issue a $425.1 million in residential mortgage-backed securities, to pump capital into the single-family rental market.
The securitization, Tricon Residential 2025-SFR1, is backed by a single-borrower, loan—itself secured by 1,507 mortgages on residential properties.
The securitization will issue notes through six tranches of class A, B, C, D, E and F notes, according to Kroll Bond Rating Agency's analysts. The deal is slated to close on March 6, according to Asset Securitization Report's deal database, and all the note classes have a March 2042 maturity date, KBRA said.
German American Capital originated the deal's one asset, one non-recourse, first-lien, floating-rate mortgage. Notes are benchmarked to the one-month Secured Overnight Financing Rate (SOFR), expected to price at 178 over the benchmark, according to KBRA.
The loan requires interest-only payments, with a two-year initial term and three options for one-year extensions, KBRA said. The collateral pool breaks down to 1,472 single-family homes, 19 condominium units and 16 duplex properties.
On average, the properties, which have an original lease term of 12.7 years on a weighted average (WA) basis, have an average broker price opinion (BPO) of $364,384. The properties are distributed across nine states, and the top three core based statistical areas account for 50.6% of the portfolio. Those break down to Phoenix (21.7%), Atlanta (21.2%) and Riverside-San Bernardino (7.7%), the rating agency said.
Like other single-family rental deals, the transaction can release individual properties that are subject to certain prepayment premiums that range from 5% to 20%. The deal also has a voluntary substitution feature, where the issuer can substitute up to 2% of the underlying homes, by unit count, as of the closing date.
Tricon's pool had 49 vacant properties, which translated to a 3.4% vacancy rate in the pool, lower than the average 6.0% in KBRA's comparison set of 24 deals.
Deutsche Bank, BofA Securities, RBC Capital Markets and Wells Fargo Securities are on the deal as placement agents, KBRA said.
KBRA assigns AAA to the class A notes; AA- to the class B notes; A- to the class C notes; BBB to class D; and BBB- to class E.
