Kroll Bond Rating Agency Assigns Preliminary Ratings to American Homes 4
NEW YORK -- May 7, 2014
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six classes of
American Homes 4 Rent 2014-SFR1 (AH4R 2014-SFR1) mortgage pass-through
AH4R 2014-SFR1 is a single-family rental (SFR) securitization that will be
collateralized by a $482.7 million loan secured by mortgages on 3,871
income-producing single-family homes. The loan backing the securitization will
be a non-recourse, first lien, floating rate mortgage loan originated by
Goldman Sachs Mortgage Company on the securitization closing date and funded
with the proceeds from the sale of the certificates. The underlying properties
are one- to four-unit residential properties located in five states (Florida,
Texas, Georgia, Arizona, and Nevada).
KBRA used a hybrid analysis to evaluate the SFR transaction, which
incorporated elements of both our commercial mortgage-backed securities (CMBS)
and residential mortgage-backed securities (RMBS) methodologies, as the
underlying real estate contains 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.
The loan will be secured by first priority mortgages on the properties, and a
grant of a security interest in all personal property of the borrower. KBRA
considers the mortgage structure to be superior to a loan secured solely by an
equity pledge because the trust will have a first priority lien and security
interest in the properties. Therefore, if the trust were to exercise remedies
following a default, it would be able to acquire the properties, as opposed to
having its recovery limited to the sponsor’s equity. The utilization of
mortgages in this transaction was essential in assigning an ‘AAA’ rating.
For details on KBRA’s analysis, see the pre-sale report: American Homes 4 Rent
2014-SFR1 Pre-Sale Report.
Class Rating Class Principal
A AAA(sf) $270,396,000
B AA+(sf) $37,733,000
C A+(sf) $40,889,000
D A-(sf) $38,696,000
E BBB(sf) $62,286,000
F BB+(sf) $32,700,000
CMBS Property Evaluation Guidelines
U.S. CMBS Multi-borrower Rating Methodology
U.S. RMBS Rating Methodology, published January 9, 2012
Residential Mortgage Default and Loss Model, published January 9, 2012
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).
Kroll Bond Rating Agency
Andrew Giudici, 646-731-2372
Nitin Bhasin, 646-731-2334
Keith Kockenmeister, 646-731-2349
Michele Patterson, 646-731-2397
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