Moody's Investors Service has assigned provisional ratings to four classes of certificates backed by one floating rate loan secured by mortgages on 3,750 single-family rental properties owned by the Invitation Homes 2014-SFR2 securitization.
The complete rating action is as follows:
- $322.6 million of Class A certificates, Assigned (P) Aaa (sf)
- $78.8 million of Class B certificates, Assigned (P) Aa2 (sf)
- $69.4 million of Class C certificates, Assigned (P) A2 (sf)
- $58.6 million of Class D certificates, Assigned (P) Baa2 (sf)
Moody's evaluation of the issuer's ultimate ability to repay interest and principal was based on a recovery analysis of the portfolio of single-family rental properties backing this securitization.
Moody's also evaluated the portfolio cash flow of Invitation Homes 2014-SFR2 to assess the probability of default during the term of the loan. However, the current limited availability of historical information surrounding vacancy rates, expenses and cash flow associated with single-family rental properties through a stressed environment prevented us from relying significantly on the transaction's cash flow to meet its long-term obligations.
Moody's concerns related to equity foreclosure, as expressed in their special comment "Single Family Rental Securitization Structures Without Mortgages Would Increase Risk" was mitigated for this transaction because both mortgages and pledges of the borrower's equity secure the loan that backs the transaction.
Moody's was therefore able to assign high investment grade ratings to the senior certificates.
Moody's assessment of THR Property Management, the property manager, is that it has a strong ability to effectively handle the day-to-day business of managing a national single-family rental platform.