Starwood Waypoint Residential Trust has issued its first securitization collateralized by income-producing single-family homes, bringing the total issuance among the SFR asset class to $7.2bn.
The offering marks the 13th SFR deal since the asset class launched in November of last year.
Kroll Bond Rating Agency (KBRA) and Morningstar Credit Ratings assigned preliminary ratings to six classes of the offering, called SWAY Residential 2014-1 (SWAY 2014-1), giving the $234.2m top tranche their AAA rating. Pricing guidance on the top tranche was reportedly released around 130 basis points over Libor.
The securitization is collateralized by a $531m floating rate, interest-only loan secured by first priority mortgages on 4,095 single-family homes in seven states, with a two-year initial term and three 12-month extension options. Of the previous 12 transactions, 10 were also collateralized with floating rate loans featuring fully extended terms of five years.
Based on the portfolio’s aggregate BPO value, the loan-to-value (LTV) ratio is 73.7%, higher than the 71.8% average among 12 prior SFR transactions, which ranged from 65 to 78.9%; and the LTV based on KBRA’s stressed BPOs is 81.1%, also higher than the 78.7% previous average, according to KBRA’s pre-sale report on the offering.
KBRA outlined similarities and differences between SWAY 2014-1 and previous SFR deals in the pre-sale report. Among them:
-Seven previous transactions were also interest-only. The remaining five required monthly amortization equivalent to one percent per year of the loan’s outstanding principal balance as of origination date.
-The loan is secured by mortgages on 4,095 properties, which is the fourth highest property count when compared to previous transactions, which ranged from 2,876 to 6,473 with an average of 3,878 homes.
-As of the cut-off date, the properties in SWAY 2014-1 were 97.9% occupied. It’s the highest occupancy rate compared to the previous four transactions that were not fully occupied at securitization. The remaining eight transactions were fully occupied at securitization.
-The average age of the properties in SWAY 2014-1 is 33 years, which is the oldest of all rated SFR transactions. The prior 12 transactions had average property ages between 12 to 30 years.
-The underlying homes in this transaction have an average size of approximately 1,752 sf, which is the third lowest when compared to the prior transactions.
-The properties are located in seven states, with the top three states accounting for 70.3% of the collateral pool. The previous 12 transactions had property distributions ranging from five to 11 states, with an average top three state concentration of 71.7%.