McLEAN, VA—Freddie Mac is bringing to market its first seniors-only floating rate K-Deal.
The K Certificates consist exclusively of LIBOR-based, floating rate multifamily mortgages with five-, seven-, and ten-year terms on seniors housing properties. The company expects to offer approximately $326 million in K Certificates, pricing them on or about May 14, 2014. They will settle on May 23, 2014.
This is Freddie Mac’s second K Certificate offering backed exclusively by seniors housing collateral—but its first floating-rate seniors deal. The first seniors-only transaction was in April 2013.
Freddie Mac has been securitizing senior housing loans for a couple of years, usually tucking them into the K-Deals, says Robert Koontz, vice president of Freddie Mac Multifamily Securitization.
In general, the GSE is doing more floating-rate loans, in response to borrower demand as interest rates are set to rise. All together it has brought to market four floating rate K-Deals, some of which surely had some exposure to senior housing, he tells GlobeSt.com. This particular point in time, though, Freddie had enough collateral to put together an exclusive senior offering.
Wells Fargo Securities, LLC will be lead manager and sole bookrunner in this offering. Merrill Lynch, Pierce, Fenner & Smith, J. P. Morgan Securities LLC and Mischler Financial Group, Inc. will serve as co-managers.
The K-Certificates include one senior principal and interest class and one interest-only class, and will not be rated. There will also be class B, C and R certificates, which will be subordinate to the classes backing the K-S02 Certificates and will not be guaranteed by Freddie Mac.
Since 1998, Freddie Mac has financed $6.5 billion in loans backed by seniors housing facilities, $900 million of which was purchased in 2013.