Freddie Mac to offer $861 million of K certificates
Freddie Mac plans to offer $861 million of pass-through certificates backed by 44 recently originated multifamily mortgages with a seven-year term. Morgan Stanley (MS) and JPMorgan Securities (JPM) will lead the underwriting syndicate for the deal, which is set to come to market this week and settle around March 9. "We are very pleased to offer our first '700-series' of K Certificates, which are comprised entirely of multifamily mortgages with an original maturity of seven years," said David Brickman, vice president of multifamily commercial mortgage-backed securities capital markets for Freddie Mac. "Because of the strong growth in our multifamily mortgage purchases, we can now tailor securities that segregate our collateral by maturity and provide tighter principal windows to better meet the specific needs of investors." Freddie Mac said the certificates provide investors with stable cash flows, structured credit enhancement and the government guarantee. Included in the Treasury Department's recommendations on reforming the government-sponsored enterprises was a potential increase of 25 basis point in the cost of the government guarantee for Federal Housing Administration borrowers. Brickman said the government-sponsored enterprise hopes to issue more K certificate securities backed by specific collateral such as five- and 10-year multifamily mortgages. The CRE Finance Council plans to issue its own white paper soon to provide regulators and policy wonks its thoughts on multifamily housing and the rest of commercial real estate. "CREFC is working with policymakers to achieve a balanced approach that reduces taxpayer exposure while promoting a stable, counter-cyclical, and affordable source of capital for affordable and market-rate rental multifamily housing," the council said Monday. "Our highest priority is to ensure that policies provide certainty and confidence and lead to the promotion of private lending and investing that is absolutely critical to a broader recovery in commercial real estate," said Lisa Pendergast, president of the CRE Finance Council. Write to Jason Philyaw.