McLEAN, VA–Freddie Mac has priced its second K-Certificate backed by workforce housing property loans — aka its KW series. The GSE issued $451 million in these securities, or K-Certificates, that are expected to settle on March 30.
Freddie Mac introduced the KW series in May 2016 with the goal of introducing more liquidity in this segment of the market — that is, housing properties with rents below the area average market rent that are rented to individuals earning 80% or less of their area median income.
K-W02's A-1 and A-2 classes priced on March 22 and X1 and X3 priced on March 24.
Freddie Mac is pleased with the overall pricing, Robert Koontz, vice president of Multifamily Capital Markets tells GlobeSt.com, but he adds that the offering priced at a slight premium of two-to-four basis points — likely because the market is not as familiar with KW Certificates as with Freddie Mac's well established K-Certificates.
The K-Certificates all have some portion of workforce housing loans, he explains. For a KW deal, Freddie takes the loans that would have gone into a K-deal and places them into a separate execution. “These pools have the same Freddie Mac guarantee and same loans, but are simply not viewed to have the same liquidity as a standard K-deal due to the lower volume,” Koontz says.
When Freddie Mac introduced the series last year investors tended to ask about the performance of the workforce housing loans compared to the regular K-deal loans, Koontz says. “Our response was that the workforce housing loans would perform just as well, if not better due to the lack of supply in that segment of the market.”
This year Koonz was gratified to note that the questions from the investors were slightly different, focusing on the frequency of the issuance. “We expect to make two to three issues this year,” he says.
McLEAN, VA–Freddie Mac has priced its second K-Certificate backed by workforce housing property loans — aka its KW series. The GSE issued $451 million in these securities, or K-Certificates, that are expected to settle on March 30.
K-W02's A-1 and A-2 classes priced on March 22 and X1 and X3 priced on March 24.
The K-Certificates all have some portion of workforce housing loans, he explains. For a KW deal, Freddie takes the loans that would have gone into a K-deal and places them into a separate execution. “These pools have the same
When
This year Koonz was gratified to note that the questions from the investors were slightly different, focusing on the frequency of the issuance. “We expect to make two to three issues this year,” he says.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
