McLEAN, VA-Freddie Mac is bringing to market a new type of multifamily Structured Pass-Through Certificate. Called K-P certificates, these are comprised of seasoned loans the GSE has had on its portfolio, explains Mitch Resnick, vice president of Freddie Mac Multifamily. “Hence the ‘P’, which stands for portfolio,” he tells GlobeSt.com. The standard K-certificate deals, by contrast, consist of newly-originated collateral. The K-P deals are also fully wrapped, he adds. “These loans’ credit risk we are obviously comfortable with,” he says.

The first K-P deal is launching this week: Freddie Mac is pricing an approximate $450 million transaction, which it expects to settle at the beginning of October. It is backed by 28 seasoned multifamily mortgages. Freddie Mac is also serving as special servicer for the related underlying trust, the first time the GSE has served in this capacity in its K Series program.

Credit Suisse Securities (USA) LLC is the lead manager and bookrunner. CastleOak Securities, L.P., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC are serving as co-managers. The K-P01 Certificates are unrated and include two senior principal and interest classes and one senior interest only class. The K-P deals are another option to offer to investors, Resnick says. He expects the investors to be relatively the same as those that participate in the wrapped portion of the standard K-certificate deals. In other words, “investors looking for stability, agency backed debt.”

Resnick adds Freddie Mac is not transitioning out of the K-certificate program. “This is just an additional, small type of transaction we are trying out. We don’t expect to do it in significantly high volume in the future.”