Fannie Mae (FNMA/OTC) announced the pricing of its fourth Multifamily DUS® REMIC for 2018, designated as M4, totaling $705.9 million on April 10, 2018. This deal, executed under the Fannie Mae Guaranteed Multifamily Structures (Fannie Mae GeMS™) program, marks a significant step in the company’s commitment to green initiatives within the mortgage-backed securities market. The 2018 M4 REMIC not only underscores Fannie Mae’s robust activity in the multifamily sector but also highlights the growing importance of sustainable financing options for property owners and investors alike.
Key Highlights of the 2018 M4 Fannie Mae GeMS REMIC Transaction
According to Dan Dresser, Vice President, Multifamily Capital Markets, Trading & Credit Pricing at Fannie Mae, the 2018 M4 transaction represents a notable achievement for the Green Rewards Financing program. This deal propelled the Green GeMS program’s total to an impressive $5 billion. The GeMS program is specifically designed to foster a dynamic secondary market for Fannie Mae Green Mortgage-Backed Securities (MBS). This initiative empowers more borrowers to invest in property enhancements that demonstrably reduce energy and water consumption. These improvements not only lead to decreased operating expenses for property owners but also lower utility costs for tenants, contributing to the conservation of natural resources. Simultaneously, the Green GeMS program provides investors with attractive low-risk investment opportunities characterized by stable cash flow. The 2018 M4 REMIC is a prime example of how Fannie Mae is facilitating environmentally responsible investments in the multifamily housing market.
Structure Details of the FNA 2018-M4 Offering
The FNA 2018-M4 offering is structured into multiple tranches, each with specific characteristics to meet diverse investor needs. All classes within the FNA 2018-M4 structure are backed by Fannie Mae’s guarantee for the full and timely payment of both interest and principal. Below is a detailed breakdown of the offering structure:
| Class | Original Face | Weighted Average Life | Coupon (%) | Coupon Type | Spread | Offered Price |
|---|---|---|---|---|---|---|
| A1 | $80,000,000 | 6.79 | 2.942 | WAC | S+38 | 98.9 |
| A2 | $625,926,000 | 9.77 | 3.042 | WAC | S+57 | 97.6 |
| X | $80,000,000 | 6.79 | 0.100 | FIX/IO | Not Offered | Not Offered |
| Total | $705,926,000 |
This table provides a clear overview of the different classes within the 2018 M4 REMIC, including their original face values, weighted average life expectancies, coupon rates, and offered prices. The structure is designed to cater to a range of investment strategies and risk profiles within the mortgage-backed securities market.
Collateral Composition of Group 1
The underlying collateral for the 2018 M4 REMIC, designated as Group 1, is robust and geographically diverse:
| UPB | $705,926,100 |
|---|---|
| Collateral | 36 Fannie Mae DUS Green MBS |
| Geographic Distribution | FL (26.4%), TX (21.3%), LA (11.3%) |
| Weighted Average Debt Service Coverage Ratio (DSCR) | 1.52x |
| Weighted Average Loan-to-Value (LTV) | 68.8% |
The total Unpaid Principal Balance (UPB) for Group 1 collateral is $705,926,100, secured by 36 Fannie Mae DUS Green MBS. Geographically, the portfolio is well-distributed across Florida (26.4%), Texas (21.3%), and Louisiana (11.3%), mitigating regional economic risks. The Weighted Average Debt Service Coverage Ratio (DSCR) stands at a healthy 1.52x, indicating strong cash flow generation from the underlying properties. Furthermore, the Weighted Average Loan-to-Value (LTV) of 68.8% reflects a conservative lending approach, providing additional security to investors in the 2018 M4 REMIC.
Accessing Further Information
For investors and interested parties seeking more detailed information about the 2018 M4 Fannie Mae GeMS REMIC, the comprehensive Fannie Mae GeMS REMIC Term Sheet (FNA 2018-M4) is readily available. This document can be accessed via the Fannie Mae GeMS Archive page: https://www.fanniemae.com/portal/jsp/mbs/mbsmultifamily/gems_archive.html. These resources provide in-depth insights into the structure, performance, and background of the 2018 M4 transaction and the broader Fannie Mae GeMS program.
Disclaimer: This release contains forward-looking statements subject to federal securities laws. Investment decisions should be based on a thorough review of the prospectus and prospectus supplement, along with Fannie Mae’s most recent filings with the SEC, available at www.fanniemae.com and www.sec.gov. Fannie Mae continues to play a crucial role in the U.S. housing market by supporting affordable rental housing and the 30-year fixed-rate mortgage, partnering with lenders to facilitate housing opportunities nationwide.
