Freddie Mac Reduces Concentration of Large Loans in New “K-Series” Pool

Freddie Mac is sponsoring its upcoming $1.3 billion multi-family loan securitization with a lower concentration of large loans within the collateral pool compared to recent “K-Series” transaction averages.

According to pre-sale reports, the top 10 loans in Freddie’s Series K114 Structured Transfer Certificate (SPC) deal represent 38.7% of the pool, which is below the 2020 and 2019 cumulative averages for its shelf. securitization for commercial loans for multi-family dwellings.

Fitch Ratings and DBRS Morningstar assigned preliminary ratings of AAA to the A-1 and A-2 class tranches, each benefiting from a credit enhancement of 18.375%. Class A-1 notes total $97.2 million and Class A-2 notes total $969.2 million.

The pool consists of 59 loans largely secured by older mid-rise and garden star multi-family apartment complexes that have recently undergone updates and renovations. Three community loans for manufactured housing and one loan for assisted living facilities are also part of the FREMF 2020-K114 Series transaction.

Signage is seen outside the Freddie Mac headquarters in McLean, Virginia, U.S., Tuesday, October 1, 2019. Freddie and Fannie Mae will be allowed to raise capital by billions of dollars to protect against potential losses , a key step in the Trump administration’s push to free the mortgage giants from U.S. control. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

The loans have an outstanding balance of $1.3 billion, or approximately $22.14 million each over a 10-year term. The 10-year loans are well seasoned, with weighted average remaining terms of 118 months. WA’s interest rate is 2.96%, with 15 loans – or 30% of the pool per balance – with interest-only payments for the full term.

None of the borrowers’ loans are in default or are currently part of Freddie Mac’s forbearance program related to COVID-19 economic stresses. The forbearance plan was expanded in June to give developers and operators three more months of loan grace – as long as landlords agree to prevent any eviction action against their delinquent tenants.

The apartments have a 94.5% WA occupancy.

DBRS Morningstar rated “favorable overall credit metrics” for the latest Series K transaction.

Previous CommBank uses AI to help triage customers into loan deferment
Next Jesse Lingard joins West Ham on loan from Manchester United | West Ham United