CoreVest American Finance’s fourth multiborrower securitization of single-family rentals this year includes a pool of homes with nearly twice the average property age of rated SFR deals in the past three years.
The $274.7 million CoreVest American Finance 2020-4 transaction collateralized by 97 single-family, duplex and multi-unit condominium homes encompasses a pool of 3,328 rental units in several East Coast and Midwest markets with a weighted-average age of 60 years.
More than 62% of the pool’s balance is securitized by properties age 50 and older, according to presale reports from Fitch Ratings and Kroll Bond Rating Agency.
“The subject properties are more than double the average age of the properties in the 20 prior KBRA-rated single-borrower SFR transactions issued since July 2017,” Kroll’s report stated.
The units are located on 2,348 properties, consisting of single-family, two-to-four family and multifamily properties — a collateral pool similar to CoreVest’s previous deals involving large numbers of properties backed by loans to smaller, non-institutional investors.
While the average per-unit property value is $127,554, the average loan size among the 97 loans is $2.9 million. All of the loans were originated by CoreVest or other affiliates of parent firm Redwood Trust.
The loans will back the sale of 10 classes of bonds sponsored by CoreVest, including a $176.52 million Class A tranche with preliminary AAA ratings from Fitch and Kroll. The notes carry credit enhancement of 35.75%.
According to the presale reports, all of the loans were current as of November 2020, and none of the borrowers had made debt-service relief requests or been granted forbearance due to COVID-19-related economic stresses. About 69% of the pool balance involve newly originated or refinanced CoreVest loans structured with upfront debt servicer reserves — ranging from three to six months of principal and interest payments.
The transaction is the 14th overall for CoreVest since 2015, all of which have performed well with only minimal losses, while only 79 out of 1,191 loans having gone to special servicing. CoreVest has issued the bulk of multiborrower SFR secrutizations during that time, compared to the single-borrower institutional deals that make up most of the SFR volume.
Multiborrower securitizations provide more challenges to issuers, noted Kroll, given that individual smaller borrowers included in the pool lack the financial resources, loan-reporting and property-management experience of larger-scale institutional investors. But “mom-and-pop” investors still own over 99% of the $15 billion in the single-family rental market in the U.S., Kroll noted.
