Freddie Mac's latest securitization will sell $906 million in multifamily mortgage pass-through certificates secured by revenues from 30 commercial residential property loans, through the series 2024-K756.
Kroll Bond Rating Agency says the multi-borrower transaction will 10 classes of notes; three will issue principal and interest certificates, while five classes of noteholders will receive interest-only; one class receives principal only and one class is a residual interest.
Freddie Mac, as a guarantor, will purchase six classes of the FREMF 2024-K756 certificates, which is considered a positive ratings characteristic, according to KBRA and Fitch Ratings, whose analysts also assessed the certificates.
All of the rated certificates appear to have a final distribution date of July 2062, according to KBRA.
KBRA assigns AAA to all of the notes it rates, while Fitch assigns AAA to the A1, A2, X1 and A2-A notes.
The pool, collectively, has a cap rate of 8.57%, with an in-trust loan-to-value (LTV) at the cutoff date of 102.3%, and an appraisal LTV of 61.5%. KBRA considers the former a positive ratings characteristic, it said. When compared with KBRA's comparison set of 18 deals, the KBRA cap rate was a 8.43%, while the average in-trust cutoff LTV from the comparison set was 108.6%, the rating agency said.
Fitch Ratings also rated the notes and said FREMF 2024-K756 had lower leverage compared with recent Freddie Mac seen-year transactions. The Fitch LTV ratio, 113.1%, is lower than the 2023 to 2024 YTD average of 116.3% for the Fitch-rated K7 Series.
Loans financing garden properties account for 56.1% of the pool, while loans financing mid-rise, student, townhome and independent living properties account for 27.2%, 4.3%, 4.1% and 3.8% of the pool, respectively, KBRA said.
Another strong credit trait is loan performance. KBRA noted that of the seven K-series out of 16 programs established showed a default rate of 0.35% as of 2021. More recently, the delinquency rate across outstanding fixed-rate loans in the K-series' 5-, 7- and 10-year programs was about 0.06% as of July 16, 2024.
