Freddie Announces $1 Billion Commercial Mortgage Bond Deal
September 30 2009 - 3:48PM
Dow Jones News
Freddie Mac (FRE) announced a $1 billion commercial mortgage
bond deal backed by multifamily loans to be sold Oct. 7.
This follows the previous such deal in June when the government
sponsored enterprise sold $1.06 billion of these bonds, as part of
a shift in its strategy from holding these loans in its investment
portfolio to using them to raise capital to make fresh loans.
In a way, these are the only new commercial mortgage bonds to be
issued over the past 12 months. Commercial real estate was hit with
a double whammy from banks shrinking the number of loans made to
finance these deals, and by the economic downturn that has prompted
companies to shrink their size and consumers to reduce their
spending.
However, Freddie and its sibling, Fannie Mae (FNM) continue to
lend to buyers of apartment and multifamily buildings.
Freddie started packing these loans into securities as a way to
improve its liquidity so that it can continue to support at least
one corner of commercial real estate.
The current deal offers K certificates, as these securities are
called, that is backed by 46 multifamily mortgages that are
guaranteed by Freddie. Deutsche Bank Securities and Goldman Sachs
(GS) are the lead managers.
Freddie's previous offering sold $1.06 billion of these
securities with the Class A coupon at 2.225%, and Class C coupon at
5.105%.
The mortgage finance company, since its May offering, has built
a pipeline of $3 billion of loans that can be securitized. The
current offering is from this set.
"We expect offerings going forward on at least a quarterly
basis, which will enable Freddie Mac to continue to provide even
greater liquidity to the multifamily housing market," said David
Brickman, vice president of multifamily and CMBS capital markets at
Freddie.
-By Prabha Natarajan, Dow Jones Newswires; 212-416-2468;
prabha.natarajan@dowjones.com