McLEAN, VA-Freddie Mac is bringing to market its ninth K Certificates for the year—a $1.1 billion offering that is backed by fixed-rate multifamily mortgages with seven-year terms. The agency is pricing the K Certificates beginning this week and expects to settle on or about July 26, 2012. Freddie Mac was unable to return a call to GlobeSt.com in time for publication.
The K-710 Certificates are backed by 55 recently originated multifamily mortgages guaranteed by Freddie Mac. They include two senior principal and interest classes, a senior interest-only class and a junior interest-only class. In general, the typical structure for Freddie Mac’s K-deals includes K guaranteed senior and interest-only classes, with the related underlying private-label trust consisting of unguaranteed mezzanine, subordinate and interest only bonds.
The K-710 Certificates are expected to receive AAA ratings by Fitch Ratings and Morningstar Credit Ratings, which have been engaged to rate the three senior classes. Introduced in 2009, the program has become a routine fixture in the securitization space, fulfilling Freddie’s original goal of adding more liquidity to the multifamily sector.
This round of K Certificates (K-710) is being offered by a syndicate of dealers led by J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith as co-lead managers and joint bookrunners. The co-managers are Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Guggenheim Securities, LLC, Jefferies & Co., Inc., and Sandler O‟Neill + Partners LP.
In a separate report, its June 2012 economic outlook, Freddie Mac notes the ever-flourishing fundamentals for the multifamily space. For the year ending March 2012, an additional 1.5 million households moved into rental housing for a 4% increase in renter-occupied in a single year, it found. These stats dovetail with numerous other findings from a range of organizations, from the Census Bureau to Reis and Axiometrics.
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