The vacancy rate remained low across the 24 single-family rental securitizations rated by Morningstar Credit Ratings in May despite rising for a second straight month, according to Morningstar’s June 2016 Performance Summary Covering All Morningstar-Related Securitizations.
A fifth straight month of increases in lease expirations in May contributed to the uptick in the vacancy rate across the 24 transactions, according to Morningstar. During that period, lease expirations have increased from 4.1 percent up to 8.1 percent, which, despite being a large increase, is not unusual for the time of year, Morningstar reported.
“Morningstar expects lease expirations to continue to rise as summer nears, as tenants prefer moving when children are out of school,” the report noted.
Even with the increases, however, the overall vacancy rate has risen from 4.2 percent to 4.3 percent from March to April and 4.3 percent up to 4.4 percent from April to May, according to Morningstar.
The delinquency rate across the 24 transactions increased to 0.5 percent in May after four consecutive months of declines. The delinquency rate increased in 20 out of the 24 transactions in May but still remained low at 0.5 percent; only two transactions (ARP 2014-SFR1 at 1.2 percent and SWAY 2014-1 at 1.1 percent) were above 1 percent for May, and both rates were a decline from April.
Retention rates remained strong for both full-term leases and month-to-month leases in April, the most recent month for which data was available. Twenty-three out of the 24 transactions had a retention rate of 70 percent or higher for regular leases, and 17 out of 24 reported a retention rate of 80 percent or higher on month-to-month leases, according to Morningstar.
“Because more leases are scheduled to expire as the summer months approach, turnover continues to increase and has now risen for four consecutive months,” Morninstar reported.
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