Rents for properties backing single-family rental (SFR) securitizations climbed by 5.4 percent in June from their prior contractual rents, according to Morningstar Credit Ratings’ June 2016 Performance Summary Covering All Morningstar-Related Securitizations.
In fact, Morningstar’s data showed that the rents on properties backing SFR securitizations outpaced year-over-year increases on three- and four-bedroom RentRange, LLC median rents—and that the average contractual rents in top SFR metros are mostly higher than their property-level RentRange estimates.
The analysis aggregates rent changes across 24 SFR securitization and nearly 93,000 properties, according to Morningstar.
The 5.4 percent increase on rents for properties backing SFR securitizations is actually down slightly from a revised 5.6 percent in May, but still higher than the RentRange benchmarks of 5.0 percent for 3-bedroom homes and 4.8 percent for 4-bedroom homes.
Though lease expirations across the 24 transactions leveled off in June, overall vacancies rose for the third straight month due to a higher number of lease expirations in preceding months, according to Morningstar. Despite the slight increase in vacancy rate across the 24 securitizations the vacancy rate remained low at 4.7 percent.
Delinquency rates for the 24 transactions averaged 0.5 percent as of the end of May, holding steady from the previous month. While the retention rates remained strong for full-term leases, the retention rate on month-to-month (MTM) leases showed some deterioration as of the end of May, the most recent data available, according to Morningstar. On MTM leases, 10 out of 24 transactions reported a retention rate of 80 percent or higher as of the end of May—down from 17 out of 24 transactions with a retention rate of 80 percent or higher in April. Morningstar noted that turnover rose for the fifth consecutive month, largely due to seasonality; more leases tend to expire in the summer months.
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