Looking at Debt Yields for recent Single-Borrower SFRs vs some Freddie Mac MF securitizations and the Debt Yields on the SFRs are much lower than the traditional MF deals.
I'm talking about sub-5.00% vs. ~7.00%
Can someone explain why investors are willing to accept much lower DYs on SFR deals than good ole Freddie Mac K-deals, which are like the lowest risk RE deals that exist and have proven track records through multiple downturns???
Bump
Pricing is driven by cost of capital, remember investors in SFR are competing against homebuyers with a 4%, 30 year fixed rate loan. That means comparisons against traditional MF are apples and oranges.
Investors in SFRs can easily get 4%/30-yr money. That's not different than MF or SF detached financing.
The underwriting is virtually identical other than you might have the option of selling SFRs off as SF detached homes.
I even called KBRA analyst and asked this same question. Their best answer was investors like the granularity of SFRs b/c there's not 10-20 very big transactions that make up the vast majority of the typical MF CMBS pool. While I get what they're saying, I don't see how that should change the underwriting and allow more leverage on SFR deals than MF.
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