KBRA Assigns Preliminary Ratings to Tricon American Homes 2019-SFR1

  • Sep 11, 2019
  • Business Wire

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of Tricon American Homes 2019-SFR1 (TAH 2019-SFR1) single-family rental pass-through certificates.

TAH 2019-SFR1 is a single-borrower, single-family rental (SFR) securitization that will be collateralized by a $359.8 million loan secured by first priority mortgages on 2,627 income-producing single-family homes. The fixed-rate loan will require interest-only payments and have a 6½ year term. Unlike prior Tricon American Homes (TAH) securitizations, the sponsor in this transaction is SFR-JV1, a joint venture between Tricon Capital, Government of Singapore Investment Corporation (GIC) and Teacher Retirement System of Texas (TRS). TAH 2019-SFR1 will be the sixth SFR securitization issued by Tricon American Homes and associated entities excluding Silver Bay.

The underlying single-family rental properties are located in or near 17 Core Based Statistical Areas (CBSAs) across seven states. The top-three CBSAs represent 56.4% of the portfolio and include Atlanta (23.3%), Charlotte (20.4%), and Dallas (12.7%). The aggregate BPO value of the underlying homes was $476.2 million, yielding an LTV of 75.5%. KBRA adjusted the BPOs, which yielded an aggregate value of $444.5 million. This represents a 6.7% haircut to the nominal BPO value. The resulting LTV based on KBRA’s adjusted BPO value was 80.9%.

KBRA used its U.S. Single-Family Rental Securitization Methodology to evaluate the transaction. The methodology leverages elements of KBRA’s commercial mortgage-backed securities and residential mortgage-backed securities criteria due to the fact that the collateral underlying an SFR transaction has both commercial and residential characteristics. As the properties generate a cash flow stream from tenant rental payments, CMBS methodologies were used to determine the loan’s probability of default. To determine loss given default, KBRA assumed the underlying collateral properties would be liquidated in the residential property market.

For further details on KBRA’s analysis, please see our pre-sale report, entitled Tricon American Homes 2019-SFR1, which is published at www.kbra.com.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

To access ratings, reports and disclosures, click here.

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.