Freddie Mac has begun marketing its first multifamily securitization package as part of an effort to increase liquidity in the apartment loan sector.
The first offering of the new Series K-003 structured pass-thru certificates involves 62 highly rated multifamily mortgages totaling $1.06 billion. Deutsche Bank Securities is the lead underwriter for the securities, that will price and be settled during the second week of June.
"Freddie Mac is responding to difficult conditions in the multifamily housing finance market by finding innovative ways to link affordable rental housing to the capital markets," said Mike May, senior vice president for multifamily housing. Freddie capital markets vice president David Brickman noted that Deutsche Bank Securities is selling the A-1 through A-5 senior classes to the public with 20% subordination.
The senior classes along with A-6 (a subordinated class representing 12.5% of the deal) are guaranteed by Freddie. A subordinated bond (7.5% of the deal) was sold privately. Freddie has another $1 billion of mortgages in the pipeline but the next securitization has not been scheduled.
"It is going to be a growing product of ours," Brickman said, and "people can expect a steady stream of deals."