Another Sign the SFR Market Is 'Recession-Resistant'
The delinquency rate of SFR properties backing CMBS loans is below 1% and has remained at that level over the last year.
CMBS issuance in the single-family rental sector hit $8.3 billion in 2020, double the amount issued in 2019, according to recent data from Trepp.
The uptick stands in stark contrast to issuance volume for other asset classes during the pandemic year, which declined across the board. And the trend is expected to continue in 2021, as large investors flood the space and total volume inches north of $3 billion.
Trepp analysts call the SFR space “recession-resistant,” noting that the delinquency rate of SFR properties backing CMBS loans is below 1% and has remained at that level over the last year (with the exclusion of December 2020). In April, the delinquency rate of SFR loans hit 0.31%, and the special servicing rate hit 0.66% (compared to 10.32% and 10.48%, respectively, for the overall CMBS market).
The delinquency rate for SFR loans by loan count totaled 3.61% in April, with 4.55% reported as being with the special servicer, according to Trepp data.
“At their peaks over the past year, 8.49% of the loans were reported as delinquent (May 2020), and 6.79% were in special servicing in August 2020,” Trepp’s Maximillian Nelson notes. “This suggests that larger SFR loans have been current on payment and have kept overall rates muted.”
Third-party management service Progressive Residential securitized four of the five largest deals in 2021 and has invested $2.8 billion thus far in SFR loans securitized into CMBS.
Institutional investors have flooded the burgeoning SFR space, which picked up serious steam as homeownership declined and demand for larger housing alternatives grew among renters amidst the pandemic. In 2020, more than 50,000 rental homes were built—two-thirds more than the average number constructed over the last 40 years.