Three CMBS conduits faced good demand in the market last week (see p. 8), as the GMAC Commercial Mortgage Securities Inc. deal, underwritten by Deutsche Bank Alex. Brown and Goldman Sachs & Co., priced on decent terms, despite the inclusion of $89.5 million worth of Freddie Mac Multifamily Gold Participation Certificates as collateral, which presented some risk of lack of liquidity in that particular tranche.

"The reasons why securities with significant multifamily concentration have not traded better than other transactions have been concerns by investors that a large GSE purchase will impair the liquidity of the issue and concerns that all of the multifamily cashflows may have been allocated to the classes bought by the GSEs," said Michael Youngblood, managing director of real estate at Banc of America Securities. "This would thereby undermine the quality of the cashflows available to pay the other classes, so there is a liquidity concern and credit diminution concern."

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