Kroll Bond Rating Agency, Inc. (KBRA) has assigned preliminary ratings to six classes of Progress Residential 2015-SFR1 (PROGRESS 2015-SFR1) single-family rental pass-through certificates.
PROGRESS 2015-SFR1 is a single-family rental (SFR) securitization that will be collateralized by a $563.0 million loan secured by first priority mortgages on 4,028 income-producing single-family homes. The floating rate loan will require interest-only payments and have a two-year initial term with three 12-month extension options. This transaction is the second securitization issued by Progress Residential.
The underlying properties are single-family homes located in ten states, with the three largest state exposures representing 58.4% of the aggregate broker price opinion (BPO) value of the portfolio: Florida (26.5%), Georgia (16.2%), and Arizona (15.7%). The aggregate BPO value of the underlying homes was $764.1 million, yielding an LTV of 73.7%. KBRA adjusted the BPOs, which yielded an aggregate value of $692.2 million. This represents a 9.4% haircut to the nominal BPO. The resulting LTV based on KBRA’s adjusted BPO value was 81.3%.
KBRA’s utilized its Single-Family Rental Securitization Methodology to evaluate the transaction. The methodology leverages elements of KBRA’s commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (RMBS) 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 (PD). To determine loss given default (LGD), 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 Progress Residential 2015-SFR1, which was published today 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.
| Class | Rating | Balance (USD) | Rating Action | |||
| A | AAA(sf) | $286,528,000 | Preliminary | |||
| B | AA(sf) | $53,485,000 | Preliminary | |||
| C | A-(sf) | $45,844,000 | Preliminary | |||
| D | BBB+(sf) | $38,204,000 | Preliminary | |||
| E | BBB-(sf) | $62,654,000 | Preliminary | |||
| F | BB(sf) | $48,136,000 | Preliminary | |||
| G | NR | $28,151,000 | N/A | |||
17g-7 Disclosure:
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found here.
About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
