The vacancies in collateral backing the first U.S. securitization of rental properties declined to 6.5% in February from 8% in January, according to Moody’s Investors Service.
The number of occupied properties in Blackstone Group’s Invitation Homes 2013-SFR1 as of Feb. 28 is 2,999; at the deal’s closing in November 2014, the number of occupied properties was 3,207.
Monthly rents for the pool rose in February, tracking the improvement in the occupancy rate. The pool rental income for the month of February was $3.9 million, compared with $3.8 million for the month of January, according to Moody’s.
The performance of this deal is being closely watched as other instititutional investors prepare to issue bond backed by rental properties. Deutsche Bank Securities estimates that approximately $5 billion in issuance is slated for 2014.
There has been some fluctuation in vacant properties over the past few months, but February’s numbers show an improvement on January’s figures. In total 208 of the properties included in the pool remained vacant as of the end of February; that number was at 256 at the end of January. However, the tenant renewal rate declined to 66.3% from 71.3%, but is still within Moody's expectations.
Moody's shows how the deal has performed since closing in the chart below.
“Based on the issuer’s historical renewal rate of 65%-70% and the declining monthly lease expirations, we expect the vacancy rate to decline further,” said Moody’s analysts in the report.
In a report published in February, Moody's said that the trend of rising U.S. home prices have pushed down rental yields in many single-family markets.
Moody’s analyzed a sample of 10 cities to calculate single-family home rents and implied gross rental yields on three- and four-bedroom single-family homes from the fourth quarter of 2011 to the fourth quarter of 2013. The increase in home prices significantly outpaced the increase in rents during this period, with gross rental yields sliding 20.7% on average for three-bedroom homes across the sample from 9.7% to 7.7%, according to Moody’s. Rental yields for four-bedroom homes on average declined 18.7% from 8.2% to 6.7%.