Freddie Mac's first offering of structured pass-through “K” certificates backed exclusively by multifamily mortgages with a five-year term is in the works this week, and is expected to settle on or about April 11.
Mitch Resnick, co-head of multifamily capital markets, told this publication he could not offer too many details on the transaction while it was in the market, but he could speak to the catalysts for the transaction.
“We've been accumulating five-year loans and historically we've been trying to do seven-year deals and 10-year deals so it just seemed logical that a five-year deal would be the next one,” he said. “We started amassing collateral in response to both borrower interest and investor interest. We're trying to serve both communities.”
A syndicate of dealers led by Wells Fargo and Morgan Stanley as co-lead managers and joint book-runners is offering the securities. Merrill Lynch, Credit Suisse and Guggenheim Securities will serve as co-managers. Fifty recently originated multifamily mortgages guaranteed by Freddie back the collateral.
The certificates include two senior principal and interest classes and a junior interest-only class, with Moody's and Morningstar engaged to rate the four senior classes and expected to assign their top investment-grade ratings.
The K-501 deal is Freddie's fourth K certificate offering this year.
