Freddie Mac is adding some new innovations to upcoming commercial mortgage securities deals from its so-called
Freddie expects the deal, which is approximately $450 million in size, to price next week and settle on or about Oct. 3.
“It’s a slightly different twist on our program,” Mitch Resnick, vice president of Freddie Mac multifamily, said of the new deal K-P01.
Generally, K deals have been around $1.3 billion in size, the current one is “a little bit smaller” and is collateralized by seasoned loans from Freddie’s portfolio rather than new originations, he said.
Also in the new K-P deal, Freddie purchases and guarantees all the securities in the underlying trust, in contrast to other K deals where some unguaranteed subordinate securities have been placed with third-party investors. In addition, for the first time in the K series Freddie is serving as special servicer for the related underlying trust.
The unrated but fully guaranteed transaction has two senior principal and interest classes and one senior interest-only class.
Resnick said this deal would not cannibalize the existing K program and that Freddie is standing behind the quality of the 28 portfolio loans collateralizing the securities by putting its full guarantee on the entire transaction.
“It’s new for us, we’re trying it out,” he said, characterizing the transaction as one aimed at providing Freddie Mac with a tool to manage its retained portfolio and funding. It also offers an additional product type to investors, he said.
“It’s another arrow in our quiver,” said Resnick.
When asked whether there will be more deals of this type done, he said it is “an option we are going to try to pursue. We’ll see how this one goes.”
Credit Suisse Securities is the lead manager and bookrunner. Co-managers are Castle Oak Securities, Merrill Lynch, and Morgan Stanley.
