Freddie Mac is marketing a roughly $1.6 billion multifamily mortgage-backed securitization.

The deal, Series K-028, is Freddie Mac's tenth K certificate offering of the year. K certificates are structured pass-through certificates, which are multifamily mortgage-backed securities, according to a press release published by the company today.

Series K-028 consists of two senior principal and interest classes, one senior interest-only class and a junior interest-only class. The three senior classes received preliminary ‘AAA’ with stable outlook ratings by Fitch Ratings. The X3 class was not rated. The interest A classes have a tranche thickness of 84.250%. The deal is expected to price on Friday.

The collateral pool backing the K certificates consists of 88 recently-originated multifamily mortgages that are guaranteed by Freddie Mac.

J. P. Morgan Securities and Credit Suisse are co-lead managers and joint bookrunners on the deal. Guggenheim SecuritiesMischler Financial GroupMorgan Stanley, and Wells Fargo will serve as co-managers.

Consistent with previous Freddie Mac transactions, no loans in the pool have existing subordinate debt, but all loans in the transaction are permitted to incur future subordinate debt, contingent upon: a maximum combined loan-to-value (LTV) ratio equal to the lesser of 80% or the original LTV; combined DSCR of at least 1.25x; Freddie Mac approval; at least 12 months after first mortgage, noted Fitch in a presale report.

Fitch conducted site inspections on 73.4% of the properties and concluded “the overall collateral quality to be worse than that of the majority of other recent fixed-rate deals”, with 10% of the sample receiving a grade below “B”.

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