NEW YORK, Feb 19 (IFR) - The stabilized vacancy rates for
the single-family home rental properties backing the first-ever
REO-to-rental securitization from Blackstone's Invitation Homes
unit were higher than that predicted by the issuer.
In a deal "performance update", Morningstar Credit Ratings
said the expected stabilized vacancy rate for properties
underlying the deal were 8.0% or in line with its expectations
but exceeded the issuer's underwritten vacancy rate of 6.0%.
Morningstar along with Moody's and Kroll gave Triple A
ratings to the ground-breaking transaction.
The vacancy numbers were still well within the "stressed"
parameters of Morningstar's initial assessment, meaning the deal
is performing as expected. Moreover, performance is predicted to
improve this year as fewer rental leases expire.
And despite an early drop-off in collected rents, payments
were made in full to bondholders in December 2013 and January
2014, the rating agency said.
The findings are based on the initial performance data from
the first few months of the transaction's life.
"Given the limited historical performance data for the
single-family rental asset class as a whole, Morningstar
recognizes the importance of sharing detailed portfolio and
property-level performance information with the market," wrote a
team of ratings analysts led by Becky Cao.
"Morningstar will compare its initial underwriting
assumptions with the actual portfolio performance in order to
assess if the performance is consistent with its assumptions at
There has already been a reduction in rental cashflows
received since collections started last October, mostly due to
lease expirations on the underlying rented-out homes. In total,
the percentage of vacant and delinquent properties was 8.3% as
of January 2014 by property count. The gross rent collected in
January was 7.6% lower than the gross rent collected as of the
cut-off date last October.
"This reduction in rent is primarily due to vacant
properties and is consistent with Morningstar's expected
stabilized vacancy rate of 8.0%, but exceeds the issuer's
underwritten vacancy rate of 6.0%," the analysts wrote.
Of the leases that expired in December, 78.5% renewed. This
exceeds Morningstar's expected renewal rate of 66.7%.
"As the number of lease expirations decline throughout 2014,
and the vacant properties are filled, we expect the vacancy rate
to stabilize and to potentially decline," the analysts wrote.
Blackstone's Invitation Homes 2013-SFR1 transaction, for
US$479m, was the most hotly anticipated deal of 2013. Though
industry observers were surprised that it was rated Triple A,
the deal was a success when it priced in November, attracting
scores of investors desperate for access to any aspect of US
residential mortgage credit after a five-year drought.
The transaction has had mixed performance since then,
teetering around par but occasionally going below it.
The trade was backed by rental income from only 3,207 out of
more than 40,000 foreclosed US properties that the private
equity firm snapped up over the past two years.
Competitors such as American Homes 4 Rent and Colony Capital
have similar transactions in the works, with some market players
predicting the deals will surface by the end of the first
HAROT 2014-1: Honda priced its US$1.5bn prime retail trade,
Honda Auto Receivables Owner Trust 2014-1. The
1.14/2.18/3.02-year Triple A notes were printed at EDSF plus
14bp, interpolated swaps plus 16bp and interpolated swaps plus
23bp, respectively. JPMorgan, BNP Paribas and Deutsche Bank were
the joint leads. The transaction was also upsized from US$1bn.
TAL 2014-1: The first container lease deal of the year was
priced by TAL Advantage V. The TAL portfolio consists of 187,000
containers from seven different marine cargo container types and
all containers are currently out on lease. The transaction was
solely rated by S&P and offered a five-year Single A and Triple
B tranche. Price guidance was shown at interpolated swaps plus
200bp area and 265bp area with final spreads set at 190bp and
250bp. Bank of America (structuring lead), RBC and Wells Fargo
were the joint leads. The trade was upsized to US$291.02m from
GALC 2014-1: GreatAmerica Leasing priced its US$423.545m
144A GALC 2014-1 series. The 1.25/2.25/3.36-year Triple As were
priced at EDSF plus 33bp, interpolated swaps plus 38bp and
interpolated swaps plus 55bp. Wells Fargo (structuring lead) and
Bank of America were the joint leads. It was GALC's first
primary trade in over a year.
VOLT 2014-NPL1/NPL2: Credit Suisse is out with price
guidance on the US$435.3m VOLT 2014-NPL1 and the US$427.3m VOLT
2014-NPL2. The 1.20-year Triple As in both series are being
talked with yield ranges of 3.625%-3.75%. Both are expected to
CSMC Trust 2014-SURF: Credit Suisse has priced the US$186.8m
144A/REG S CSMC 2014-SURF. The collateral consists of one
two-year, floating rate commercial mortgage loan with five
one-year extension options, secured by a first-priority lien
mortgage on the borrowers' fee simple interest in the 198-room
Shutters on the Beach hotel and the 129-room Casa del Mar hotel.
The 1.99-year Triple A slice was printed at one-month Libor plus
JPMBB 2014-C18: JPM and Barclays have priced the US$957.6m
JPMBB 2014-C18. The 9.90-year Triple A duper was printed at the
wide end of talk at swaps plus 93bp. The 9.96-year Triple B
minus (Fitch/Kroll) private class was stamped at swaps plus
380bp. The loan sellers consist of: JPMORGAN CHASE BANK, N.A.
(48.0% of IPB), BARCLAYS BANK PLC (29.1% of IPB), REDWOOD
COMMERCIAL MORTGAGE CORPORATION (10.2% of IPB); STARWOOD
MORTGAGE FUNDING II LLC (9.4% of IPB); RAIT FUNDING, LLC (3.2%
GSMS 2014-NEW: Goldman Sachs has announced the US$306.3m
GSMS 2014-NEW. The collateral consists of a seven-year,
fixed-rate, amortizing mortgage loan secured by first mortgage
liens on the fee simple interests of 25 individual borrowers in
25 independent living facilities located in 17 states. The
sponsor is Newcastle Investment Corp. Pricing is expected the
week of February 24th.