Freddie Mac has priced a $757 million offering of structured pass-through certificates under its “K Certificates” program that securitizes recently originated multifamily mortgage loans.
According to a Freddie release, the certificates are unrated and were priced at par with a one-month coupon of Libor plus 70 bps, yielding 1.0021%. The certificates are expected to settle on or around Feb. 4, according to Freddie.
The certificates are backing 27 properties owned by Canadian alternative asset management firm Brookfield Asset Management Inc. (NYSE: BAM).
Wells Fargo is the sole lead manager and arranger, with Barclays Capital, Credit Suisse, and Samuel A. Ramirez & Co. as co-managers.
The Brookfield “K” certificates (or K-BAM certificates) will include one senior principal and interest class and one interest only class.
As per the structure of Freddie’s K-deals, the certificates will be guaranteed by Freddie and backed by corresponding classes in the FREMF 2016-KBAM Mortgage Trust. The trust will issue certificates of Class B and Class R certificates that will not be guaranteed by Freddie.
Freddie’s K certificates program issues deals in multifamily securities that are intended to offload taxpayer risk through the government services enterprise (GSE) entity on to private investors who purchase the non-guaranteed bonds. Freddie purchases multifamily mortgages secured by apartment buildings of five or more units, freeing up the pipeline of multifamily mortgage originations that ensure a greater supply of affordable rental housing.
In the first nine months of 2015 (using the latest available quarterly figures), Freddie Mac reported that it offloaded $21.9 billion of $34.1 billion of new business volume into so-called “K-Deals”. The entire volume of multifamily loans backed by Freddie in 2014 was $28 billion.
As of Sept. 30, 2015, according to a Freddie Mac investor presentation, Freddie Mac had a multifamily loan portfolio of $54.2 billion and a multifamily investment portfolio of $20 billion.