Morgan Properties Closes Five Freddie Mac K-Series “B-Pieces” Across $5.3 Billion in Total Loans in 2019

Morgan Properties Closes Five Freddie Mac K-Series “B-Pieces” Across $5.3 Billion in Total Loans in 2019

KING OF PRUSSIA, PA — Morgan Properties, a real estate investment and management company, announced today that it has acquired five separate K-Series B-Pieces from Freddie Mac in 2019. The total size of those five deals is $5.3 billion and encompasses more than 50,000 units.

The five B-Pieces that Morgan Properties acquired had a total face amount of $400 million. Additionally, $674 million, or 13 percent of the total unpaid principal balance (UPB), were loans where Morgan Properties was also the underlying borrower.

Since launching its credit platform in September 2017, Morgan Properties has closed on nine K-Series B-Pieces across $8.5 billion in loans, of which $1.4 billion, or 16% of the total UPB, were loans where Morgan Properties was the underlying borrower. The nine B-Pieces have a total face amount of $637 million.

“Since launching our credit platform in 2017, we have quickly become one of the most active Freddie Mac B-Piece investors. Our ability to leverage off our team’s multifamily expertise and proprietary data analytics will result in superior risk-adjusted returns to our investors,” said Jason Morgan, Principal at Morgan Properties. “Additionally, we have actively pursued opportunities where Morgan Properties loans represent a significant concentration of the total collateral, which provides us further confidence in these investments given our company’s exemplary track record. We look forward to investing in Freddie Mac’s K-Series Program in 2020 and beyond.”

Details on the five K-Series Deals Morgan Properties closed in 2019 are as follows:

K-88: The issuance is supported by a pool of 64 multifamily mortgage loans. At closing, the total loan balance represented by the Pass-Through Certificates was approximately $1.4 billion and the B-Piece that Morgan Properties acquired had a face amount of approximately $108 million. The loan metrics underlying the Pass-Through Certificates included: LTV of 67.1 percent at closing, which is anticipated to amortize down to 62.1 percent by maturity; and a weighted average net cash flow debt service coverage ratio of 1.39x.

K-94: The issuance is supported by a pool of 65 multifamily mortgage loans. At closing, the total loan balance represented by the Pass-Through Certificates was approximately $1.3 billion and the B-Piece that Morgan Properties acquired had a face amount of approximately $100 million. The loan metrics underlying the Pass-Through Certificates included: LTV of 69.7 percent at closing, which is anticipated to amortize down to 64.4 percent by maturity; and a weighted average net cash flow debt service coverage ratio of 1.40x.

K-W09: The issuance is supported by a pool of 43 multifamily mortgage loans. At closing, the total loan balance represented by the Pass-Through Certificates was approximately $627 million and the B-Piece that Morgan Properties acquired had a face amount of approximately $47 million. The loan metrics underlying the Pass-Through Certificates included: LTV of 70.7 percent at closing, which is anticipated to amortize down to 64.4 percent by maturity; and a weighted average net cash flow debt service coverage ratio of 1.31x.

K-G02: The issuance is supported by a pool of 17 multifamily mortgage loans. At closing, the total loan balance represented by the Pass-Through Certificates was approximately $544 million and the B-Piece that Morgan Properties acquired had a face amount of approximately $41 million. The loan metrics underlying the Pass-Through Certificates included: LTV of 73.3 percent at closing, which is anticipated to amortize down to 67.5 percent by maturity; and a weighted average net cash flow debt service coverage ratio of 1.39x.

K-102: The issuance is supported by a pool of 46 multifamily mortgage loans. At closing, the total loan balance represented by the Pass-Through Certificates was $1.37 billion and the B-Piece that Morgan Properties acquired had a face amount of approximately $103 million. The loan metrics underlying the Pass-Through Certificates included: LTV of 69.9 percent at closing, which is anticipated to amortize down to 64.1 percent by maturity; and a weighted average net cash flow debt service coverage ratio of 1.41x.

Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. K-Series Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds, such as the “B-Piece.” K Certificates, typically feature a wide range of investor options with stable cash flows and structured credit enhancement.

Source: Morgan Properties, 160 Clubhouse Rd, King Of Prussia PA 19406

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