Blackstone’s real estate portfolio company, Invitation Homes, has issued its fifth securitization collateralized by single-family homes.
The transaction, Invitation Homes 2015-SFR1 (IH 2015-SFR1), is collateralized by a single $540.9m floating rate loan originated by JPMorgan Chase Bank and secured by mortgages on 3,072 income-producing single-family homes across 10 states. The two-year loan carries an interest rate 263 basis points above the one month libor rate.
Kroll Bond Rating Agency (KBRA) and Morningstar Credit Ratings issued pre-sale reports on the transaction, awarding its $227.8m top tranche AAA ratings.
IH 2015-SFR1 has a loan-to-value (LTV) of 78.9% based on the portfolio’s aggregate BPO value, which is equivalent to the two previous Invitation Home transactions (IH 2014-SFR3 and IH 2014-SFR2) but higher than all of the other SFR deals to date, Kroll noted. The previous transactions had LTVs ranging between 65.0% to 78.9%, and averaging 71.9%.
Ratings agencies have sparred over the risks of the asset class, with Fitch Ratings not rating any of the transactions. The latest deal is exposed to many of the same volatility issues as the rest of the asset class, like limited performance and operating history, refinance risk, the fact that it is backed by an interest only loan and price volatility. The property pool collateralizing IH 2015-SFR1 is the most geographically diverse among SFR securitizations, but concentrated in regions that experienced high levels of mortgage defaults during the downturn.
“The availability of distressed homes in these regions triggered high investor demand for such properties, which contributed to a rapid appreciation of property values,” Kroll analysts noted in their report.
The offering marks the 14th SFR deal since the asset class launched in November of last year, bringing total issuance to more than $7.7bn.