March’s property-level data for 24 single-family rental securitizations show a continuing “stable” performance for the single-borrower, single-family rental asset class, according to Morningstar’s April 2016 Performance Summary Covering All Morningstar-Related Securitizations.
“Vacancy rates and delinquency rates generally remained steady or improved,” authors Brian Alan, Brian Sandler, and Rohit Jadhav wrote. “Retention rates remained high for majority of the deals. Turnover rates increased for the third consecutive month in line with the increase in lease expirations.”
While vacancy rates trended lower for the sixth consecutive month in March, the authors noted that trend may reverse in the coming months due to the number of pending lease expirations and that Morningstar notes that higher lease expirations generally correlate with higher vacancy rates.
The average delinquency rate among the 24 securitzations covered in the report remained low in March, at 0.5 percent; only three of the 24 transactions in the report had a delinquency rate higher than 1.0 percent—HPA 2016-1 (Home Partners of America) at 1.3 percent, SWAY 2014-1 (SWAY Residential) at 1.3 percent, and TAH 2015-SFR1 (Tricon American Homes) at 1.3 percent.
Retention rates generally remained strong across the 24 transactions, with 22 of them reporting rates of 73 percent or higher as of February (the latest retention data available). The only two outliers were ARP 2014-SFR1 (American Residential Properties) at 64.1 percent and PRD 2015-SFR1 (Progressive Residential) at 68.9 percent. The overall rate for all transactions as of the end of February was 78.1 percent.
Morningstar reported that the turnover rate appears to be rising in 2016 after posting declines for the last few months of 2015. The overall turnover rate as of the end of March was 2.9 percent across all 24 transactions, up from 2.5 percent in February and 2.3 percent in January. AH4R 2015-SFR2 (American Homes 4 Rent) had the highest turnover rate at the end of March at 4.5 percent.
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