Kroll Bond Rating Agency Assigns Preliminary Ratings to Colony American Homes 2014-1 (CAH 2014-1)

Business Wire


Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of Colony American Homes 2014-1 (CAH 2014-1) mortgage pass-through certificates.

Colony American Homes 2014-1 (CAH 2014-1) is a securitization transaction that will be collateralized by a $513.6 million loan secured by mortgages on 3,399 income producing single-family homes. The collateral for the transaction is a non-recourse, first lien, floating rate mortgage loan (Loan) with a cut-off date principal balance of $513.6 million. The Loan will be originated by JPMorgan Chase Bank on the securitization closing date and funded with the proceeds from the sale of the certificates. The Loan is secured by the borrower’s fee simple interest in 3,399 single-family homes. The underlying properties consist of 3,399 one to four unit residential properties located in seven states (Arizona, California, Colorado, Georgia, Florida, Nevada and Texas).

KBRA used a hybrid analysis to evaluate the SFR (single family rental transaction, which incorporated elements of both our CMBS and RMBS methodologies, as the underlying real estate contains 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 (PD). To determine loss given default (LGD), KBRA assumed the underlying collateral properties would be liquidated in the residential property market. For details, see our pre-sale report: Colony American Homes 2014-1 Pre-Sale Report.

The Loan will be secured by first priority mortgages on the properties, and a grant of a security interest in all personal property of the borrower. KBRA considers the mortgage structure to be superior to a loan secured solely by an equity pledge because the trust will have a first priority lien and security interest in the single family residential (SFR) properties. Therefore, if the trust were to exercise remedies following a default, it would be able to acquire the properties, as opposed to having its recovery limited to the sponsor’s equity. The utilization of mortgages in this transaction was essential in assigning an ‘AAA’ rating.


Colony American Homes 2014-1 (CAH 2014-1) Preliminary Ratings

Class     Rating       Initial Class Balance
Class A     AAA(sf)       $291,000,000
Class B     AA+(sf)       $42,000,000
Class C     AA-(sf)       $56,000,000
Class D     A-(sf)       $40,500,000
Class E     BBB-(sf)       $84,100,000

*Notional Amount


Related publications:

CMBS Property Evaluation Guidelines

U.S. CMBS Multi-borrower Rating Methodology

U.S. RMBS Rating Methodology, published January 9, 2012

Residential Mortgage Default and Loss Model, published January 9, 2012

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Kroll Bond Rating Agency
Glenn Costello, 646-731-2332
Nitin Bhasin, 646-731-2334
Keith Kockenmeister, 646-731-2349
Michele Patterson, 646-731-2397
Andrew Giudici, 646-731-2372


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