McLEAN, VA-Tuesday morning Freddie Mac announced a new offering of Structured Pass-Through Certificates—its 11th for the year. The $1.1 billion in K-certificates are expected to price this week and settle around September 25. It is too early to discuss the specifics of this transaction, Mitch Resnick, head of Multifamily Capital Markets for Freddie Mac, tells GlobeSt.com.
“Usually the transactions take a day or two to clear on the senior level,” says Resnick. That said, he adds, “the program has been remarkably consistent as far as what the transactions look like.”
The K-certificates are backed by 77 recently-originated multifamily mortgages and are guaranteed by Freddie Mac. They include two senior principal and interest classes, one senior interest only class and a junior interest only class.
A syndicate led by Morgan Stanley and Wells Fargo Securities as co-lead managers and joint bookrunners, is taking the offering to market. Barclays Capital, Guggenheim Securities, J.P. Morgan Securities and UBS Securities will serve as co-managers. Fitch Ratings and Kroll Bond Rating Agency have been engaged to rate the three senior classes.
Freddie Mac is launching this offering with high hopes. In general the CMBS market escaped with little damage from the summer months—a period last year when the market all but tanked for these securities. “The secondary market was relatively active throughout the month of August,” notes Resnick. “Spreads have been tightening for agency CMBS and we are hoping that trend will continue.”
Freddie Mac’s multifamily line of business has been posting strong activity in general. Earnings for the first six months of 2012 were $942 million, compared to $559 million for the same period last year, and $1.3 billion for the entire year of 2011. Second-quarter earnings were $318 million and first quarter 2012 earnings were $624 million. The same robust pattern can be seen in its K-certificate activity: for the first six months of the year it brought eight K-deals to the market backed by $10 billion of collateral, compared to $7.7 billion for the same period last year and $13.7 billion for all of 2011.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
