Freddie Oversubscribes $1bn Offer of Multifamily Certificates
Freddie Mac (FRE) priced its offering of structured pass-through certificates, or K Certificates, that consist of multifamily mortgage-backed securities (MBS). The mortgage giant said late last week the $1.06bn in K Certificates -- offered in late September -- are likely to settle around Oct. 22. The certificates, priced at $101 apiece, garnered significant investor support and ultimately oversubscribed, according to Michael Cosgrove, a Freddie spokesperson. The investor interest comes at a time when there have been few multifamily deals. Freddie set out to fill that need by putting multifamily loans traditionally held in its mortgage-related investments portfolio into a new securitization vehicle, and the K Certificate was born. "We're always looking to support the market," Cosgrove told HousingWire. "We began an effort to make sure at origination that multifamily loans would be suitable for securitization." The efforts are paying off as investors oversubscribed on the latest K Certificates offering. The issue priced at subscription levels from 1.7x to 2.4x, meaning significant investor interest resulted in over-subscription by 70% to 140% beyond the expected levels, depending on certificate class. Investors included large money managers, life insurance companies and pension funds including overseas accounts, according to a corporate statement. Last week's announcement looks similar to another K Certificates offer settled in June that also involved multifamily MBS. That K Certificates offer, also backed by approximately $1.06bn of multifamily loans, settled on June 18. Write to Diana Golobay.