VineBrook Homes Operating Partnership is preparing to issue $403.6 million in pass-through certificates, which represent beneficial interests in the VINE 2024-SFR1 Trust, which is itself backed by a large mortgage loan financing a portfolio of 2,464 single-family rental (SFR) properties.
Known as VINE 2024-SFR1 Trust, the transaction will issue six classes of notes through seven tranches, according to ratings analysts from Fitch Ratings, which also noted that the certificates will follow a sequential-pay structure. Classes A, B, C and D notes have the same rated final maturity date, March 2041, Fitch said.
Fitch says it expects the deal to close on February 29, and says that VineBrook has a pledge from its direct corporate parent representing 100% of its direct ownership interests in the borrower as additional security for the $403.7 million loan. This pledge provides a more efficient and quicker enforcement of the collateral to VineBrook than a traditional mortgage foreclosure process, in case of severe performance issues.
Fitch also noted that while the mortgage loan allows for collateral releases from the trust, in connection with a property sale to a third party–which opens the door to adverse selection in the portfolio–the transaction does not include provisions for excess collateral release.
VineBrook Homes bought the portfolio of homes in early 2021, primarily, and according to DBRS the company says the mortgage has a loan-to-value ratio of 81.0%. For its part, DBRS estimates the LTV to be 85.2%. DBRS also noted that it assumes a base-case net cash flow of $15.8 million, about 28% lower than the issuer underwritten net cash flow amount of $21.9 million, according to the rating agency.
Midland Loan Services is on the deal as master servicer, special servicer and liquidity provider, according to Fitch.
As for other collateral characteristics, Fitch says the total debt per home is about $163,823 with a coupon of 4.50%, on average, compared with $141,275 and 4.75% seen on the VINE 2023-SFR1 deal, respectively. The loan has an original term of 60 months, the same as the previous deal, Fitch said.
Fitch assigns ratings of AAA, AA-, A-, and BBB- to the A, B, C and D tranches, respectively. DBRS assigns AAA to the A and B tranches; AA to the C tranche; and BBB to the D, E1 and E2 tranches, the rating agency said.
