NEW YORK CITY—Fitch Ratings will rate single-borrower single-family rental transactions as high as A, but no higher, the ratings agency said last week. It cited elevated cash flow leverage, refinance risk and dependence on property liquidation for debt repayment as key factors.

“Presale reports for recent SFR transactions justify elevated leverage with current property values and the likelihood of repayment through the foreclosure and sale of the properties, particularly to owner occupants,” according to Fitch. “In our view, this line of thinking may persuade market participants to materially underestimate maturity default risk and the issuers’ ability to refinance.” 

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