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Single-Family Rental Transactions See Low Delinquencies, Improved Vacancies

rental [1]Delinquencies remained low among 15 single-family rental securitizations for March, according to data reported by Morningstar Credit Ratings [2] in a recent report titled "Single-Family Research: Performance Summary Covering All Morningstar Rated Securitizations [3]."

Delinquencies were reported at less than 1 percent in 11 out of 15 single-family securitizations rated by Morningstar in March 2015. In general, the number of tenants with delinquent payments also continued to decline. The highest percentage of tenants with delinquent payments for any one securitization in March was 1.9 percent for an American Residential Properties securitization, ARP 2014-SFR1, according to Morningstar.

However, the vacancy rate for ARP 2014-SFR1 improved month-over-month, falling from 10 percent in February down to 8.3 percent in March.

"Morningstar had anticipated elevated levels of vacancy since at cutoff, lease expirations were scheduled to peak through February 2015 with 56.3 percent of the portfolio due to expire through this time period," Morningstar said in the report. "With fewer lease expirations for ARP 2014-SFR1 in the coming months, it is expected that this metric may continue to improve."

The monthly retention rates for the 15 Morningstar-rated securitizations generally were reported to be in the mid-70s to low-80s range, with two exceptions – two Progress Residential transactions, PRD 2014-SFR1 and PRD2015-SFR1, which posted monthly retention rates of 70.6 percent and 68.6 percent, respectively, in February, according to Morningstar.

March's report found that lease expirations were rising across multiple transactions, which could lead to a future rise in vacancies, according to Morningstar, although sufficient cash flows among the transactions met the bond obligations were met for the 15 single-family rental securitizations.

Click here [3] to see the entire Single-Family Rental Research report covering March 2015 from Morningstar.