KBRA Assigns Preliminary Ratings to Progress Residential 2019-SFR1

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six
classes of Progress Residential 2019-SFR1 (Progress 2019-SFR1)
single-family rental pass-through certificates.

Progress 2019-SFR1 is a single-borrower, single-family rental (SFR)
securitization that will be collateralized by a $450.7 million loan
secured by first priority mortgages on 2,391 income-producing
single-family homes. The fixed-rate loan will require interest-only
payments and have a five-year term. Progress 2019-SFR1 will be the tenth
KBRA-rated SFR securitization issued by Progress.

The loan’s cash management structure features a “Low DSC Period”
concept. If a Low DSC Period has occurred with respect to loan component
E, F or G and there are insufficient available amounts to pay full or
partial interest on Loan Component F and/or loan component G then the
due interest on these components will be deferred and added to the
respective principal balance. While such deferrals are occurring, any
excess cash flow will be held in a reserve account until the cash flows
improve and the DSC threshold is met for two consecutive quarters or the
borrower prepays the loan in an amount causing the DSC threshold to be

The underlying single-family rental properties are located in or near 17
Core Based Statistical Areas (CBSAs) across nine states. The top-three
CBSAs represent 32.1% of the portfolio and include Phoenix (11.1%),
Orlando (10.8%), and Nashville (10.2%). The aggregate BPO value of the
underlying homes was $496.2 million, yielding an LTV of 90.8%. KBRA
adjusted the BPOs, which yielded an aggregate value of $469.0 million.
This represents a 5.5% haircut to the nominal BPO value. The resulting
LTV based on KBRA’s adjusted BPO value was 96.1%.

KBRA used its Single-Family
Rental Securitization Methodology
to evaluate the transaction.
The methodology leverages elements of KBRA’s commercial mortgage-backed
securities and residential mortgage-backed securities 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. To determine loss
given default, 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 Progress
Residential 2019-SFR1
, which is published 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.

Class     Rating     Balance (USD)     Rating Action
A     AAA (sf)     $174,916,000     Preliminary
B     AA+ (sf)     $35,975,000     Preliminary
C     AA- (sf)     $27,291,000     Preliminary
D     A (sf)     $21,089,000     Preliminary
E     BBB- (sf)     $88,078,000     Preliminary
F     BB- (sf)     $32,254,000     Preliminary
G     NR     $34,735,000     N/A
H     NR     $36,400,000     N/A

To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)


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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S.
Securities and Exchange Commission as an NRSRO. In addition, KBRA is
designated as a designated rating organization by the Ontario Securities
Commission for issuers of asset-backed securities to file a short form
prospectus or shelf prospectus, is recognized by the National
Association of Insurance Commissioners as a Credit Rating Provider, and
is a certified Credit Rating Agency (CRA) by the European Securities and
Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is
registered with ESMA as a CRA.


Kenneth Kor,
Associate Director
(646) 731-2339

Daniel Tegen, Director
(646) 731-2429

Akshay Maheshwari, Associate Director
(646) 731-2394

Nitin Bhasin, CFA, Senior Managing Director
(646) 731-2334

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