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October 15, 2013

Freddie Mac Closes $195M M-F Bulk Loan Sale

By Barbra Murray, Contributing Editor

Mike Lipson, of Freddie Mac

Mike Lipson, of Freddie Mac

Freddie Mac has just entered new territory. The government-sponsored enterprise recently wrapped up its first multi-family bulk loan disposition, selling 27 performing mortgage loans with a total unpaid principal balance of $195 million. With Mission Capital Advisors spearheading the effort, Freddie Mac sold the multi-family, student housing and assisted living loans to Colony Capital.

Mission Capital had its hands full–full of bids, that is. The real estate and capital markets solutions firm received 23 offers on the loan portfolio, ultimately conducting multiple bid rounds. The high level of investor interest came as no surprise to Freddie Mac.

“There is absolutely a need for assets out there,” Mike Lipson, senior vice president of Multifamily Asset Management and Operations for Freddie Mac, told Commercial Property Executive. “The demand is there and we knew it. One of the things we wanted to do was take advantage of that demand by putting together a portfolio of seasoned loans that we had on our books.”

The apartment, student housing and seniors housing sub-sectors of the multi-family market continue to thrive, with no end in sight. As noted in PwC’s Emerging Trends in Real Estate 2013, young-adult renters and downsizing baby boomers along with homeownership displacement from the housing crash combine to create substantial demand in the apartment market. In student housing, the party goes on as the sizeable generation-Y segment of the population enters and continues to attend college. And aging baby boomers are keeping assisted living and other seniors housing property types alive.

Everybody wants a piece of multi-family property. Hopeful buyers of Freddie Mac’s loan portfolio ran the gamut, and the process was completed in a flash; the closing came just five days after the final bid date.

“It shows that investors across the spectrum from equity to debt see multi-family as a good investment,” added Lipson. “Whatever their type of investment may be, they see it as a good asset class to be invested in.”

However, multi-family mortgage investors will probably have to wait a bit for the opportunity to snap up another Freddie Mac loan portfolio. “We don’t have any [additional bulk loan sales] planned at this point in time but now that we’ve done our first successful bulk sale, we’ll always look at it as one vehicle we’ll use to manage our portfolio goals,” Lipson concluded.