Starwood Waypoint Priced its first securitization of single-family rental property, a $505 million deal backed by some of the oldest homes in this emerging asset class.
The certificates sold by Starwood Waypoint Residential Trust 2014-1 (SWAY 2014-1) pay a weighted average blended interest rate of 237 basis points over Libor, according to a company press release. The triple-A rated class A notes priced at 140 basis points over one-month Libor, the double-A rated class B notes priced at 195 basis points over one-month Libor and the single-A class C notes priced at 265 basis points over one-month Libor.
By comparison, Invitation Homes priced its fourth single-family rental deal, IHSFR 2014-SFR3, at tighter spreads. The triple-A bonds, also structured with a two-year term, priced at 130 basis points over one-month Libor, and the single-A class C notes priced at 275 basis points over one-month Libor.
At the double-A level, the class B notes on the Invitation Homes deal priced five basis points wider at 200 basis points over one-month Libor.
Starwood Waypoint's transaction is collateralized by a single loan secured by mortgages on 4,095 single-family rental homes. The loan has a two-year term with three one-year extensions, at the option of the borrower.
The underlying properties are located in or near 20 Core Based Statistical Areas across seven states. The top three states represent 70.3% of the portfolio and include Florida (30.1%), Texas (24%) and Georgia (16.3%), while the top three CBSAs represent 46.6% of the homes, and include Miami (16.7%), Atlanta (15.9%) and Houston (14%).
The homes backing the deal have an average age of 33 years and are the oldest of any of the single-family rental pools. Only 43 of the underlying properties were constructed after 2007.
The other single-family rental deals completed to date are collateralized by properties that have average home ages ranging from 12 to 30 years, with an average age of 21 years, according to Kroll Bond Rating Agency.
Starwood Waypoint Residential Trust was created in January 2014 as a merger between Starwood Property Trust and Waypoint Real Estate Group. However Waypoint began acquiring, rehabilitating and leasing single-family rental properties in 2009. The publicly traded real estate investment trust has a market cap of approximately $962.9 million as of Nov. 28.
Kroll noted in the presale report that the transaction is structured with less equity than previous single-family rental deals. The transaction's loan-to-value ratio is 73.7%, which is higher than the average of 71% from the last 12 deals to be placed.