The Home Partners of America Trust platform is preparing its third securitization of 2021, issuing a total of $902.2 million in certificates collateralized by a single loan, which itself is secured by a pool of 2,729 first-lien residential mortgages.
Home Partners of America 2021-3 Trust will issue the notes from a pool of single-family rental (SFR) properties and 139 townhomes, according to DBRS Morningstar, which noted that $833.2 million of the notes will be rated.
Morgan Stanley and Citigroup Global Markets are lead managers on the deal, which will issue notes through seven tiers, and on a sequential-pay structure. Subordination provides credit enhancement to the cash flow, DBRS said.
Home Partners, 2021-3 will first pay interest to the $435 million, class A certificates, followed by principal payments up to the distribution about until principal is paid in full, and then any unreimbursed applied realized loss amounts. The trust will repeat this distribution process for each class through the $64.9 million F certificates.
Midland Loan Services will service the certificates, and DBRS expects to assign ratings ranging from ‘AAA’ through ‘BBB,’ according to a pre-sale document.
The deal is slated to close on December 22, DBRS said.
Home Partners Holdings, leased some of the properties under its Lease with a Right to Purchase (RTP) Program. For the first three to five years of renters’ contracts, occupants can buy the properties, as long as the homes are in approved communities. On 817 of the underlying properties, the broker price valuations exceed current RTP prices by about $33.2 million.
Monthly rental payments range from $1,250 to $3,530, with monthly rents averaging $2,292, DBRS said. Lease terms average 12.2 months, with about half of that term remaining.
DBRS assume a base-case net cash flow (NCF) of about $32.6 million, about 34.6% lower than $49.9 million, which is the issuer’s underwritten NCF.
The underlying properties are distributed among 21 states, with Colorado accounting for the largest concentration in the portfolio, 16.5%, by broker valuation. Georgia follows with a 14.6% representation; then Florida, with 12.7%; Washington with 10%; and Texas, accounting for 9.3% of the portfolio, rounds out the top five states by BPO.
