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Morgan Properties closes investment in six-piece Freddie Mac K-Series for a total of $6.5 billion in multi-family loans in 2020

KING OF PRUSSIA, PA – Morgan Properties, the nation’s fifth-largest apartment owner and operator, is delighted to announce its continued investment in the Freddie Mac K-Series space after acquiring six separate K-Series pieces in 2020 for $6.5 billion in loans. The six B coins that Morgan Properties acquired had a total face amount of approximately $500 million.

In September 2017, Morgan Properties launched its Special Situations platform where the company invests in fixed income securities, recapitalizations and other alternative investment opportunities. Morgan Properties saw a great opportunity to leverage its vertically integrated multi-family investment platform and further diversify across the capital stack. Since launching its Special Situations platform, Morgan Properties has closed multiple recapitalizations of large multi-family equity portfolios as well as 15 Freddie Mac K-Series B-Pieces out of $15 billion in loans with a total nominal amount of $1.1 billion. of dollars.

“While 2020 is an unprecedented year, Morgan Properties continues to be one of the nation’s most active multi-family equity and credit investors. Our continued expansion into the Freddie K space demonstrates our belief in long-term multifamily fundamentals,” said Jason Morgan, principal of Morgan Properties. “Freddie Mac and Fannie Mae have stepped up to stabilize the housing sector during a time of enormous uncertainty and we feel honored to play a small role as a B-Piece investor helping to ensure a functioning securitization process. We look forward to continuing to grow our Special Situations platform in 2021 and beyond.

Details of the six The Series K transactions that Morgan Properties closed in 2020 are as follows:

K-105: The issue is backed by a pool of 71 multi-family mortgages. At closing, the total loan balance represented by the transfer certificates was approximately $1.5 billion and the B coin that Morgan Properties acquired had a face value of approximately $110 million. The loan parameters underlying the transfer certificates included: an LTV of 67.5% at closing, which is expected to amortize to 62.0% at maturity; and a weighted average free cash flow debt service coverage ratio of 1.49x.

KG-03: The issue is backed by a pool of 24 multi-family mortgages. At closing, the total loan balance represented by the transfer certificates was approximately $595 million and the B coin that Morgan Properties acquired had a face value of approximately $45 million. The loan parameters underlying the transfer certificates included: an LTV of 75.1% at closing, which is expected to amortize to 66.2% at maturity; and a weighted average free cash flow debt service coverage ratio of 1.36x.

K-114: The issue is backed by a pool of 59 multi-family mortgages. At closing, the total loan balance represented by the transfer certificates was approximately $1.3 billion and the B coin that Morgan Properties acquired had a face value of approximately $98 million. The loan parameters underlying the transfer certificates included: an LTV of 68.7% at closing, which is expected to amortize to 63.3% at maturity; and a weighted average free cash flow debt service coverage ratio of 1.64x.

KSG-1: The issue is backed by a pool of 28 multi-family mortgages. At closing, the total loan balance represented by the transfer certificates was approximately $579 million and the B coin that Morgan Properties acquired had a face value of approximately $43 million. The loan parameters underlying the transfer certificates included: an LTV of 70.6% at closing, which is expected to amortize to 63.6% at maturity; and a weighted average free cash flow debt service coverage ratio of 1.55x.

K-118: The issue is backed by a pool of 55 multi-family mortgages. At closing, the total loan balance represented by the transfer certificates was $1.3 billion and the B coin that Morgan Properties acquired had a face value of approximately $97 million. The loan parameters underlying the transfer certificates included: an LTV of 64.6% at closing, which is expected to amortize to 59.1% at maturity; and a weighted average free cash flow debt service coverage ratio of 2.12x.

K-740: The issue is backed by a pool of 44 multi-family mortgages. At closing, the total loan balance represented by the transfer certificates was $1.3 billion and the B coin that Morgan Properties acquired had a face value of approximately $96 million. The loan parameters underlying the transfer certificates included: an LTV of 59.5% at closing, which is expected to amortize to 56.8% at maturity; and a weighted average free cash flow debt service coverage ratio of 2.36x.

Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. The Series K offerings are part of the company‘s business strategy to transfer some of the risk of losses from taxpayers to private investors who buy the subordinated unsecured bonds, such as the “B-Piece.” K Certificates typically offer a wide range of options for investors with stable cash flows and structured credit enhancement.

About Morgan Properties: Founded in 1985 by Mitchell Morgan, Morgan Properties is a national real estate investment and management company headquartered in King of Prussia, Pennsylvania. Morgan Properties and its affiliates own and manage a multi-family portfolio consisting of 307 apartment communities and more than 79,649 units located in 15 states, primarily in the Mid-Atlantic and Northeast region. Morgan Properties is currently the largest multi-family landlord in Pennsylvania, Maryland and New York, as well as the fifth largest apartment landlord in the nation. With approximately 2,000 employees spread across its geographic footprint, the company prides itself on its rapid decision-making capability, strong capital relationships and operational expertise. Learn more at www.morganproperties.com