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Freddie Mac Issues First-Ever Senior Housing CMBS

May 8, 2013
Freddie Mac is offering its first Structured Pass-Through Certificates (SPTC) backed exclusively by multifamily mortgages on seniors housing properties.

The company expects to offer $369 million in K Certificates (K-S01), which were expected to price last week and settle next week.

This is Freddie Mac's seventh offering this year, and its first one backed exclusively by seniors housing collateral.

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The K-S01 Certificates are backed by 27 multifamily mortgages and are guaranteed by Freddie Mac. The K-S01 Certificates include two senior principal and interest classes and a senior interest only class, and will not be rated.

"Freddie Mac Multifamily is expanding our securitization series while bringing liquidity to the Seniors Housing market," said Mitchell Resnick, vice president of Freddie Mac Multifamily Loan Pricing and Securitization. "The sponsors behind these loans are experienced property owners, operators and managers who understand the unique housing needs of this rental segment."

Freddie Mac Multifamily sources its senior housing loans from a select group of experienced multifamily lenders with extensive experience in the seniors housing market. Freddie Mac purchases a variety of seniors housing loans including those backed by independent living properties, assisted living properties, memory care properties and senior properties with a limited amount of skilled nursing care.

In 2012 Freddie Mac purchased $650 million in seniors housing mortgages.

The three largest loans in the pool are as follows:

1. $111 million for Belmont Village, a two-property portfolio with 314 assisted living units with one in Los Angeles and one in Cardiff-By-The-Sea, CA.
2. $35.5 million for the White Pines Inver Grove Heights / Comforts of Home Portfolio, a six-property portfolio with 249 assisted living units in Westchester County, NY.
3. $32.5 million for the Brightview Greentree, with 171 independent living units in Marlton, NJ.

Freddie Mac also initiated another separate K-Certificate offering of $1.4 billion (K-027) expected to price this week and settle on or about May 22.

The K-027 Certificates are backed by 78 recently-originated multifamily mortgages. The loans have principal balances that range from $1.2 million to $200 million for the largest loan, which is secured by the fee simple interest in The Alta at K Station, an 848-unit high-rise apartment complex in Chicago, IL.

The top five loans represent 26.2% of the pool cut-off balance, and include Rollin Street Flats in Seattle, WA; Windrock and Stone Canyon Apartments in Parker, CO; Briarcliff East Apartments in Cockeysville, MD; and San Cervantes Apartments in Chandler, AZ.

The top 10 exposures represent 38.7% of the total pool balance. The properties are located in 28 states, with the two largest concentrations in Illinois and Texas. The majority of the properties are garden-style apartment projects (56 properties). The properties range in size from 24 to 840 units.

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