Delinquencies were reported at below 1 percent for 16 out of 17 single-family rental securitizations in April, according to data reported by Morningstar Credit Ratings in its May 2015 Single-Family Research: Performance Summary Covering All Morningstar Rated Securitizations released Friday.
April represented a noticeable drop in delinquencies on the securitizations. Delinquencies were reported at less than 1 percent in 11 out of 15 single-family securitizations rated by Morningstar in March 2015, compared with 16 out of 17 in April. The recently-closed AH4R 2015-SFR1 (American Homes 4 Rent) and IH-2015 SFR2 (Invitation Homes) were added to the May 2015 report.
The single-family rental securitization with the highest percentage of delinquent tenants out of the 17 covered in May's report was ARP 2014-SFR1 (American Residential Properties) with 2.3 percent for April, which was a month-over-month increase from 1.9 percent, according to Morningstar. The vacancy rate for this securitization is improving, however, dropping from a peak of 10.0 percent in February, to 8.3 percent in March, down to 8.0 percent in April. Morningstar reported that this metric may continue to improve for the ARP 2014-SFR1 securitization, since fewer lease expirations are anticipated in the coming months.
"Vacancy rates generally remain low, cash flows remain sufficient to cover bond obligations, and the asset class mostly shows performance in line with its recent history," Morningstar said in the report. "Overall, monthly retention rates remain in the mid-70s to low-80s."
Morningstar noted in the May report that lease expirations were rising across multiple transactions, which is an indication that vacancies could potentially rise in the future.
Click here to see the entire May 2015 Single-Family Rental Research report from Morningstar, covering the month of April.