Weekly Real Estate News
Summary
Freddie Mac closed a $284.1 million M-Deal covering 3,008 affordable units with a revamped securitization structure.
Freddie Mac Multifamily has closed a $284.1 million affordable-housing securitization using a revamped M-Deal structure that the company says is more consistent with its other multifamily capital-markets executions.
The M074 transaction covers 3,008 units across 19 multifamily properties, including 1,245 subsidized rental units, according to Freddie Mac. Cedar Rapids Bank and Trust Company partnered with Freddie Mac on the transaction, their fifth structured deal together.
CRBT deposited 21 tax-exempt bonds into a tax-exempt securitization backing senior Class A certificates guaranteed by Freddie Mac and subordinate Class B certificates that are not guaranteed. CRBT retained the Class B certificates, while the Class A certificates were offered publicly to third-party investors.
A 10% first-loss layer
The transaction uses an A/B structure with a 10% subordinate Class B position providing first-loss support. Freddie Mac said it will guarantee timely interest and specified principal payments on the underlying tax-exempt bonds, as well as ultimate principal on the Class A certificates.
The revised structure is intended to make M-Deals more consistent with other Freddie Mac Multifamily securitizations in trust structure, disclosure and reporting. That matters to investors because standardization can make different securities easier to evaluate and compare across Freddie Mac’s multifamily platform.
The collateral spans 11 states. Freddie Mac identified the three largest properties as being in Seattle, Albuquerque, New Mexico, and Baton Rouge, Louisiana.
All 19 properties are affordable housing. Seven receive project-based subsidies, and all benefit from new 4% Low-Income Housing Tax Credit equity. The portfolio is stabilized, with an average year built of 2001; nine of the properties were newly constructed in 2020 or later.
Connecting tax-exempt debt with capital markets
M-Deals are one way Freddie Mac brings institutional capital into multifamily housing supported by tax-exempt financing. In M074, the subordinate position remains with CRBT while the guaranteed senior certificates can be distributed to investors.
Freddie Mac described the redesign as an effort to improve consistency and transparency. Christina House, Freddie Mac’s structured production manager, said the transaction combines affordable-housing support with a more investor-friendly structure.
The transaction arrives as affordable-housing developers face persistent pressure from construction costs, financing costs and the complexity of assembling multiple capital sources. Capital-markets structures do not solve those development constraints, but they can affect liquidity and the ability of lenders to recycle capital into additional transactions.
For multifamily lenders and investors, M074 is therefore notable beyond its $284.1 million size. It provides the first practical look at how Freddie Mac’s revamped M-Deal framework is being used across a geographically diverse portfolio of affordable properties.
The deal supports 3,008 apartments in total, with 1,245 receiving subsidies. Freddie Mac did not announce changes to the underlying affordability requirements as part of the structural redesign.
