By Joy Wiltermuth

NEW YORK, Jan 28 (IFR) - Progress Residential surprised the market last week by pricing its new SFR bond tighter than those of established rivals, in another sign of the asset class's growing popularity.

The company is almost as new as single-family rental (SFR) bonds themselves, founded just two years ago to buy, refurbish and rent distressed properties after the mortgage crisis.

With just its second deal, however, Progress achieved tighter pricing than Blackstone, which is the biggest player in the fledgling SFR bond sector.

"Blackstone has a sort of halo around it as an issuer," a banker familiar with the transaction told IFR. "But investors also received the Progress name well."

The US$530.7m deal, called PROG 2015-SFR1, priced on Friday and was heard to have even attracted investors from Asia - believed to be the first SFR transaction to do so.

"We don't have complete visibility on all of the deals done so far," the banker said. "But from what we can see, it is the first."

The Triple A piece priced at one-month Libor plus 150bp, 5bp wide of the first trade of the year from Blackstone earlier in January.

But riskier tranches were sopped up at much cheaper prices, leaving Progress paying a weighted average interest rate of 1ML+226bp versus Blackstone's 1ML+250bp, according to IFR data.

The Progress Aa2/AA/AA+ rated B class was pre-placed at 1ML+185bp, while the A2/A-/A+ rated C class went for 1ML+240bp; the Baa2/BBB+ rated D class at 1ML+285bp; the NR/BBB-/BBB E class at 1ML+400bp; and the bottom NR/BB rated F class 1ML+435bp.

The F class of Blackstone, by contrast, cleared at a heftier 1ML+450bp.

The lowest blended rate to date was 1ML+154bp, achieved by American Homes 4 Rent in May 2014 when SFR bonds were still a novelty and Triple As were being gobbled up at 1ML+100bp.

But with 15 deals having printed since late 2013, when Blackstone's Invitation Homes platform inaugurated the asset class, the sector has found a foothold among investors, particularly at recent wider spreads.

Blackstone, which owns 45,600 homes according to the Kroll pre-sale report on its most recent trade, has printed five SFR trades.

American Homes 4 Rent has done three, Colony American Homes and Silver Bay Realty Trust have completed two each, while American Residential Properties has priced one.

The banker said that Progress could issue three deals this year.

Deutsche Bank was sole structuring lead on the new trade, with Bank of America Merrill Lynch, Goldman Sachs and JP Morgan acting as joint lead managers.

Former Goldman Sachs partner Donald Mullen Jr and Curt Schade, a Bear Stearns high-yield and distressed sale and trading veteran, founded Progress in 2013.

The pair had previously worked together at Bear, according to Kroll.

As of November 2014 the company had amassed a portfolio of 11,800 homes in 12 states, and is in contract to buy another 260, according to the deal's term sheet.

The firm is managed by Pretium Partners, which Mullen and Schade founded as part of a broader distressed mortgage strategy. A spokesperson for the company declined to comment.

(Reporting by Joy Wiltermuth; Editing by Shankar Ramakrishnan and Marc Carnegie)