Progress Residential plans to tap the securitization market with a deal backed by a $438 million, five-year loan that pays only on interest, which is secured on a pool of 3,317 single-family rental homes.
With this latest transaction, called Progress Residential 2015-SFR2, the issuer will have a total of three securitizations outstanding, each structured with either a fully extend term of five years or a fixed term of five years.
"This could potentially result in Progress having approximately $997.4 million of securitized debt coming due from the end of 2019 to mid-2020, assuming they exercise all their extension options in the related transactions," stated Kroll Bond Ratings Agency in a presale report. "The concentrated debt maturity profile may result in increased financial stress on the company."
Deutsche Bank, Goldman Sachs and B of A Merrill Lynch are the led managers.
The issuer will offer $230 million of triple-A rated class A notes that benefit from 47.6% of credit support, $42.4 million of double-A rated class B notes that benefit from credit enhancement of 37.9%, $35 million of single-A-plus rated class C notes that benefit from 30% credit enhancement, $30 million of triple-B-plus class D notes that benefit from 23.1% credit support, $53 million of triple-B rated class E notes that benefit from 11% credit support and $48 million of double-B-minus rated class F notes. Morningstar and Kroll assigned preliminary ratings to the deal.
Progress Residential's 2015-2 transaction pools 3,317 properties located in nine states, with the largest concentration by broker price opinion value in Florida (36.2%). The largest metropolitan statistical area is Atlanta (14%), followed by Tampa, Fla. (13.9%), according the Morningstar presale report.
Only 0.5%, by BPO value of the properties, in the PRD 2015-SFR2 transaction were vacant.
Progress is a private equity investment firm dedicated to the acquisition, leasing and management of single-family residential properties throughout the U.S. The company was launched in September 2012 and is managed by a subsidiary of Pretium Partners, which was founded by Donald Mullen Jr. and Curt Schade in 2012.
As of March 31, 2015, Progress had invested in excess of $2.2 billion in its portfolio of approximately 13,300 homes. The portfolio is comprised exclusively of single-family homes located in 26 markets across 11 states.