The vacancy rate across 25 single-family rental securitizations (covering 97,000 properties) steadied in September after months of increases, according to Morningstar Credit Ratings’ September 2016 Performance Summary Covering All Morningstar-Related Securitizations.
Fewer lease expirations were the main reason why the vacancy rate in the SFR securitizations for September was at 5.0, only slightly higher than August’s revised rate of 4.9 percent (August's original rate was 5.0 percent). In March, the vacancy rate across all transactions was at 4.2 percent; a substantial increase in lease expirations as tenants moved during the summer while kids were out of school contributed to the rising vacancy rate; however, in September, lease expirations across the 25 transactions were at 6.0 percent, their lowest level since February. Nineteen of the 25 transactions had lease expiration rates in September equal to or lower than August’s level.
“With the overall turnover rate declining and vacancy showing only modest increases, these measures may improve in the coming months as the transactions are exposed to fewer lease expirations,” Morningstar said in its report.
Morningstar reported that Houston had the highest vacancy rate among metros in September with 7.4 percent. Houston has historically had higher vacancy rates relative to other MSAs tracked by Morningstar. Many metros in Florida have recently experienced slight increases in vacancy rate, including Fort Lauderdale, Jacksonville, Lakeland, and Sarasota.
Rents across all transactions were up but in line with RentRange data, according to Morningstar.
“Rents for properties backing single-family rental securitizations rose by 4.6 percent from their prior contractual rents and are now in line with the year-over-year increases of three- and four-bedroom RentRange, LLC median rents,” Morningstar reported. “This matches the trend from one year prior, where rental gains of securitized properties converged with the rental increases from RentRange data.”
Other measures were largely unchanged, according to Morningstar; delinquency rates across the 25 transactions totaled 0.6 percent for the third straight month. The most recent data available for retention rates (August) showed that the rate for full-term leases held in the mid-70s from July to August.
Click here to view the entire SFR Securitization report from Morningstar Credit Ratings.