A Freddie Mac multifamily bond is running into some trouble in regard to the performance of one of the underlying properties.
The government-sponsored enterprise confirms a portion of the K-704 series of K-certificates, structured pass-through certificates backed by multifamily properties, priced in November 2011, is now placed with Wells Fargo (WFC) as the special servicer. It may be the first time a K-cert property moved into the hands of a special servicer.
The 700 series of K-certs are bonds issued with a seven-year term. The size is usually around $1 billion and the collateral is typically based around the United States.
In this case, there is a $1.2 billion total pool balance in the K-704 series. The collateral is 65 loans, primarily in Texas, Virginia and California.
According to London-based Structured Credit Investor, the problem loan being transferred to special servicing is located in McKinney, Texas, at the apartment complex named the Retreat at Stonebridge Ranch. The commercial property likely makes up only a portion of the Texas cut.
Wells Fargo, in its role as special servicer, will arbitrate the liquidation of the loan pool. The bond is scheduled to mature in 81 months.