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A Snapshot of Single-Borrower SFR Securitizations

Kroll Bond Rating Agency has released Single-Borrower SFR: Performance Snapshot, examining the performance of 25 outstanding single-borrower, single-family rental (SFR) securitizations, as of March 2018. The March Performance Snapshot reveals an average contractual rent rate increase of 7.2 percent since issuance among the SFR securitizations tracked by Kroll.

Kroll reports that the tracked SFR securitizations had experienced, on average, 21 months’ worth of seasoning, ranging between a single month and 43 months. For comparison’s sake, CoreLogic Home Price Index (HPI) data shows that home prices have appreciated by 14.0 percent, on average, since the issuance of the respective SFR deals.

Kroll reports that the vacancy rate across its tracked SFR portfolios ranged from 2.3 percent to 7.2 percent—averaging 4.4 percent.

“As of March 2018, five SFR operators own more than 180,000 homes, of which 91,934 are included in the 25 securitizations covered in this report,” the Performance Snapshot states. “Loan-to-value (LTV) ratios across all transactions have continued to decline since the issuance average of 73.7 percent to a Current Implied LTV of 64.7 percent.”

Atlanta, Georgia, is the market with the greatest number of homes represented in these securities at 14 percent, amounting to 12,786 homes. Dallas, Texas, is next at 6.8 percent and 6,243; followed by Phoenix, Arizona, at 6.8 percent and 6,215; Tampa, Florida, at 6.8 percent and 6,206; and Charlotte, North Carolina, at 6.7 percent and 6,193.

CoreLogic recently examined SFR investment performance in its U.S. Economic Outlook for May 2018. In a video posted to the company’s official blog, CoreLogic Chief Economist Dr. Frank Nothaft reported that “one-family rental houses, either detached or attached, have grown from 11.3 million in 2006 to 15.3 million in 2016, or from 17 percent to 23 percent of the one-family occupied stock.” CoreLogic also compared single-family rental investment to other types of real estate investment, including industrial, retail, multifamily, office, and hotel. CoreLogic found that SFR annual total return averaged 9 percent, as compared to 13 percent for industrial and 8 percent for hotel.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at David.Wharton@thefivestar.com.

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