Seeking to shrink its balance sheet's exposure to multifamily loans, government-sponsored enterprise (GSE) Freddie Mac recently completed its first multifamily bulk loan sale to an affiliate of Colony Capital.
The portfolio of 27 performing mortgage loans with an unpaid principal balance of $195 million included multifamily, student housing and assisted-living facilities. Freddie Mac retained Mission Capital Advisors as loan sale advisor.
‘This transaction marks our first multifamily bulk loan sale,’ says Mike Lipson, senior vice president of multifamily asset management and operations for Freddie Mac, in a statement. ‘We were pleased with the strong investor demand as evidenced by the 23 bids on the loan portfolio.’
Mission handled all aspects of the transaction, including valuation and analysis, establishing and maintaining the due diligence data room, conducting multiple bid rounds, and assisting the GSE with the settlement and closing five days after the final bid date.
‘The deep investor interest in this performing transaction, which ran the spectrum from balance sheet lenders to private equity funds, was further proof that the U.S. real estate recovery is gathering steam, despite recent interest-rate volatility,’ says Will Sledge, managing director of Mission. ‘We were extremely pleased with the outcome and firmly believe that fundamentals versus merely low absolute rates are now driving the market.’
It is unclear whether Freddie Mac plans to ultimately sell some or all of the performing multifamily loans it carries on its balance sheet. As of last year, the GSE reportedly held a portfolio of roughly $200 million in multifamily loans – only a small percentage of the roughly $75 billion in loans it holds in total.
Investor appetite for commercial and multifamily loans is increasing as the U.S. shifts to a ‘renter nation.’ Recently, online real estate marketplace Auction.com announced that it would be handling the sale of 447 performing multifamily loans with an unpaid principal balance of $601.3 million.