Fannie Mae's latest multifamily DUS REMIC priced under its guaranteed multifamily structures program included some exceptionally large orders and saw high demand for a yearend auction.

Kimberly Johnson, vice president of multifamily capital markets, told ASR sister publication National Mortgage News that there were “very large orders from banks and money managers” within the multi-tranche deal, although its total size was about average at $513 million.
Johnson noted that at yearend there is generally some hesitancy to add relatively long-term durations, but this time around buying remains fairly strong.

Current demand for agency CMBS “is really reflective of the up in credit trade,” Johnson said.
She said credit characteristics for the deal were “much stronger” than comparable securities in the market, citing a weighted average loan-to-value ratio of 63.7% and a debt service coverage ratio of 1.83-times.

Settlement for the transaction, identified as 11-M9, is slated for Dec. 29. All its classes are guaranteed and yield maintenance prepayment premiums apply to all underlying loans. Offered prices were as follows: 100.5 for fixed-rate classes A1 and A2, 99.75 for fixed rate class AB and 100 for floating rate class FA. The deal also had inverse interest only and IO classes that were not offered.

Johnson said in a press release that part of the demand that led to particularly large orders for 11-M9 stemmed from renewed interest in floaters.

Bank of America Merrill Lynch was the lead manager on the deal and the co-managers were Amherst Securities Group and JPMorgan Chase.

Issuance under Fannie's guaranteed multifamily structures (GeMS) program has totaled roughly $6 billion this year. Johnson predicts that it could be between $6 billion to $8 billion in 2012, given current market trends.

Fannie issues GeMS (which are resecuritizations) in addition to new commercial mortgage-backed securities. Fannie has issued about $22 billion in new CMBS this year, Johnson said.

While the GeMS program did not officially exist until this year, estimated figures that compare the size of the investor base this year to its precursor in 2010 suggest it has grown, Johnson said. She said that while the precursor to the program was not closely tracked, there were 30-40 investors that year, compared to more than 50 this year.

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