The use of securitization as a funding vehicle for any asset class is attractive as both a risk-mitigation tool and liquidity measure.

However, there may be an additional uptick not initially measured, according to Kroll Bond Ratings inaugural issue measuring the Invitation Homes rental securitization deal.

The Invitation Homes 2013-SFR1 transaction is collateralized by a single loan with a current balance of $477.5 billion, secured by mortgages on 3,207 properties. These properties are available for rent, and all eyes will follow tenant behavior as a measure of default risk.

According to Kroll, that risk is actually getting lower, for a number of reasons.

From March to April, more properties were rented, from 86% to 90% of the pool. That's good news. Lease renewals also rose, accounting in part for this improvement.

In terms of offering competitive rents to tenant, Invitations Home is doing pretty good.

"We estimate that the average rent per square foot for the occupied properties in the pool is approximately 94% of market rent," write the Kroll analysts, citing RentRange data.

And while that is a slight rise month over month, tenants are still continuing to enjoy cheaper rents, even though home prices appreciated in all the markets where the apartments are located.

"Note that while home price indices are a useful indicator of overall trends, the actual experience of properties in the pool could vary significantly from the indices," the report states.

Here is the rate of home price appreciation in those markets, click to expand.

Invitation Homes HPA

3d rendering of a row of luxury townhouses along a street

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