Kroll tells bond investors SFR market helps hedge portfolio in housing downturn


Earlier this week, the Structured Finance Investment Group held its annual Residential Mortgage Finance Symposium in New York City.

The panel discussions reflected the wide range and increasing volume of activity that the private residential mortgage-backed securities market has experienced over the past couple of years.

Kroll Bond Rating Agency kindly emailed a recap to everyone who couldn’t make it and provided some color around prevailing views on the single-family rental space.

“The SFR market continues to grow, albeit more slowly than in early post-crisis years,” the email wrap stated.

Further, positive cash flow performance and credit trends were noted at the symposium by Daniel Tegen of KBRA, as well as the growth in rents outpacing increases in expenses. 

Kroll states that:

“Tegen highlighted that 2018 SFR new issuance securitization volume was near the 2014 high of $6.7 billion, with the most recent issuance primarily driven by refinancing of the 2014 to 2015 vintage floating-rate loans. He also noted that recent deals have predominantly featured properties sourced from the refinanced securitized portfolios that typically have experienced meaningful home price appreciation.”

However, some gathered at the conference expressed disappointment that the GSEs short-lived venture into the SFR market, noting the move had attracted new investors into the space.

 “The sector has also attracted a number of investors who see the rental market as an attractive counter-cyclical play during a housing downturn,” Kroll said.

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