Cerberus nabs $616M CMBS loan on FirstKey single-family rentals

Manager’s portfolio spans more than 2,100 homes

Cerberus nabs $616M CMBS loan on FirstKey single-family rentals
Cerberus Co-CEO Stephen Feinberg (Cerberus, iStock)

Cerberus Capital Management, the parent organization of FirstKey Homes, landed a $616.1 million CMBS loan from Morgan Stanley, the Commercial Observer reported.

The loan is for five years at a fixed-rate, financing FirstKey’s 2,106-home portfolio. The investment and property manager firm counts more than 34,000 homes in its total portfolio, the vast majority of which are involved in CMBS securitizations.

The portfolio involved in this financing was assembled by FirstKey between June and August 2021, according to data from KBRA.

More than a third of the portfolio is concentrated in three major metropolitan areas: Atlanta, Charlotte and Phoenix. According to the Observer, the full portfolio spans 39 markets across 13 states, seeing a combination of Florida, Georgia and North Carolina account for more than half of the concentration.

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KBRA data show the average size of the homes in the portfolio is 1,969 square feet. The average age of the homes, meanwhile, is about 20 years old. As of Nov. 4, 151 homes in the portfolio are vacant and not leased, while 31 are vacant, but with leases in place.

Single-family rentals are one of the housing market’s hottest sectors. The number of built-to-rent homes, essentially constructed as single-family rentals, soared by 30 percent from 2019 to 2020. Built-to-rent homes account for 6 percent of all homes being constructed nationwide, according to the New York Times, and represent the fastest-growing housing sector in the country.

The property type has been a boon for investors, too. Data from securities advisory Green Street reported last week show the expected risk-adjusted return on built-to-rent investments is 8 percent on average, which is higher than the weighted average return of 6.1 percent across 18 different sectors.

[CO] — Holden Walter-Warner