Kroll Bond Rating Agency Assigns Preliminary Ratings to Tricon American Homes 2015-SFR1

Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to five classes of Tricon American Homes 2015-SFR1 (TAH 2015-SFR1) single-family rental pass-through certificates.

TAH 2015-SFR1 is a single-family rental (SFR) securitization that will be collateralized by a $380.8 million loan secured by first priority mortgages on 3,509 income-producing single-family homes. The floating rate loan will require interest-only payments and have a two-year term with three 12-month extension options. This transaction is the first securitization issued by Tricon American Homes.

The underlying properties are single-family homes located in seven states, with the three largest state exposures representing 60.5% of the aggregate broker price opinion (BPO) value of the portfolio, including California (25.7%), Florida (18.6%) and Nevada (16.2%). The aggregate BPO value of the underlying homes is $516.8 million, yielding an LTV of 73.7%. KBRA adjusted the BPOs, which yielded an aggregate value of $452.0 million. This represents a 12.5% haircut to the nominal BPO value. The resulting LTV based on KBRA’s adjusted BPO value is 84.3%.

KBRA’s utilized its Single-Family Rental Securitization Methodology to evaluate the transaction. The methodology leverages elements of KBRA’s commercial mortgage-backed securities (CMBS) and residential mortgage-backed securities (RMBS) criteria due to the fact that the collateral underlying an SFR transaction has both 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.

For further details on KBRA’s analysis, please see our pre-sale report, entitled Tricon American Homes 2015-SFR1, which was published today at www.kbra.com.

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

17g-7 Disclosure:

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found here.

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).