Vacancy rates for single-family rental (SFR) securitizations began to stabilize in September after trending downward in August, while delinquency rates remained low across 21 transactions, according to data reported by Morningstar Credit Ratings in its October 2015 Single-Family Research: Performance Summary Covering All Morningstar Rated Securitizations released Thursday.
October 2015 marks the two-year anniversary since the first SFR securitization, IH 2013-SFR1 (Invitation Homes), in October 2013. Since then, total issuance for 25 single-family securitizations in two years has amounted to $13.08 billion backed by loans on nearly 100,000 homes, according to Morningstar.
According to Morningstar’s October 2015 report, higher lease expirations tend to correlate with higher vacancy rates; AH4R 2015-SFR1 (American Homes 4 Rent) had the highest vacancy rate in September at 8.3 percent. About 50 percent of the pool for that transaction had lease expirations over the last four months, however.
The vacancy rate remained under 6.0 percent for most transactions, although the rate for AH4R 2015-SFR1 has increased from 5.5 percent in July up to 8.3 percent in September. The lowest vacancy rate as of the end of September was the IH 2013-SFR1 deal at 2.7 percent.
Only six of the 21 transactions in September reported a delinquency rate 0f 1.0 percent in September, according to Morningstar. The highest delinquency rate at the end of September was TAH 2015-SFR1 (Tricon American Homes) at 2.3 percent.
“The single-family rental asset class is continuing to develop and issuers are employing different strategies to manage their portfolios as they season,” Morningstar said in the report. “For example, the SBY 2014-1 transaction saw a prepayment of more than $6.3 million as it sold 67 Houston properties from the pool. Colony American Homes has actively managed its portfolio by selling properties that have had greater instances of vacancy, again resulting in prepayments. Lastly, American Homes 4 Rent has begun substituting new properties into its pools to replace disqualified properties.”
Click here to see the complete September 2015 Single-Family Rental Research: Performance Summary Covering All Morningstar-Rated Securitizations. Transactions covered in the summary are those from American Homes 4 Rent, American Residential Properties, Colony American Homes, Invitation Homes, Progress Residential, Silver Bay Realty, SWAY Residential, and Tricon American Homes. Two of those companies, SWAY Residential and Colony American Homes, announced on September 21 that they would be merging in a stock-for-stock transaction that is expected to close in the first quarter of 2016.