WASHINGTON, DC-Fannie Mae keeps tweaking the structure of its multifamily DUS REMIC offering—to the delight of both investors and borrowers. In its latest REMIC--its seventh this year--Fannie Mae priced one totaling $700 million that was backed by floating rate collateral. This was a first for the GSE, Kimberly Johnson, Fannie Mae vice president of Multifamily Capital Markets, tells GlobeSt.com.

“It was a big deal for us to get this done,” she says. “We have been doing floating rate loans all along of course, but this is the first time we used them as collateral in this type of execution.”

The loans are based on collateral in California, Texas and Minneapolis. The debt service coverage ratio is approximately 1.81x and the LTV is, on average, 70.8%. The REMIC was structured with one floating rate tranche and one interest only tranche, Johnson says.

Being able to expand its capacity with floating rate loans means being able to offer shorter lock out periods, which a lot of borrowers need, Johnson continues. “It is a good opportunity without a prepayment penalty. There is significant demand for this from the borrower side.”

This REMIC saw participation from traditional investors including banks, insurance, money managers and a local government fund, Johnson adds. The GSE had thought the mix might have been different—that is, whether the floating rate bonds would draw a different crowd. It didn’t but clearly at 1.2 times oversubscribed the appetite among its traditional investors was still hearty. “We expect to do a similar execution again,” she says.