Securitization deals backed by rental income continue to attract market interest as more families turn to rentals over homeownership amid tighter lending standards.
Even firms not engaged in the space are rolling out initiatives, with single-family property manager, Colony American Homes (CAH), disclosing plans Monday to create a securitization deal backed by rental income.
The company will use single-family homes within its own property portfolios to support the transactions.
It’s a new venture for the single-family rental firm and arrives just as CAH announces plans to expand an existing credit facility to $1.2 billion from $500 million.
The extra proceeds from the credit line will be directed toward single-family acquisitions, with a group of banks led by JPMorgan (JPM) and Credit Suisse (CS) funding the deal.
Colony’s securitization plans follow the recent REO-to-rental securitization deal that Blackstone (BX) subsidiary, Invitation Homes, brought to market in the past month.
Not long after the deal’s announcement, KBW analysts forecasted a nearly trillion-dollar market when calculating the lingering possibilities that exist for single-family rental securitization deals.
KBW analysts put out a report, saying that when assuming a 70% LTV on the properties in such deals, a capture rate of 35% – and the addition of $40 billion in annual production over the course of six years – the REO-to-rental securitization marketplace is nearing $920 billion in potential opportunities.
This also includes an estimation of an average priced home in the $200,000-range, bringing the total value for the single-family rental sector to $2.8 trillion.
CAH owns and manages more than 15,000 homes for rent in seven states, including Arizona, California, Colorado, Florida, Georgia, Nevada and Texas.
