Merchants Capital Completes $214MM Freddie Mac Q-Series Transaction

Rhea-AI Summary

Merchants Capital (NASDAQ:MBIN) announced the completion of a $214 million Commercial Mortgage Backed Securities (CMBS) securitization of 14 multifamily mortgage loans secured by 24 properties through a Freddie Mac-sponsored Q-Series transaction. This marks MCC's second such transaction following a prior $262 million deal. The portfolio is diverse, with properties located across Georgia, Indiana, Michigan, New York, and Ohio, and focuses on affordable housing. The loans are categorized as "Social Bonds" to support community impact financing.

Positive

• $214 million CMBS securitization completed.
• Second successful Q-Series transaction, following a $262 million deal.
• Portfolio supports affordable housing, with 93.7% of units under 80% AMI.

Negative

• None.

CARMEL, Ind., May 23, 2022 /PRNewswire/ -- (NASDAQ:MBIN) Leading financial services provider Merchants Capital (MCC), along with Merchants Bank of Indiana (MBI), announces today that it has completed a $214 million Commercial Mortgage Backed Securities (CMBS) securitization of 14 multifamily mortgage loans secured by 24 mortgaged properties through a Freddie Mac-sponsored Q-Series transaction.

This is MCC's second such transaction – last year, MCC secured a $262 million Q-Series transaction, which consisted of 15 workforce housing properties owned and operated by some of MCC's biggest clients. Unlike the previous transaction, 100% of the securities were guaranteed by Freddie Mac and sold to the market. MCC will continue to sub-service the loans in the pool.

The $214 million in loans consisted of 14 multifamily properties in Georgia, Indiana, Michigan, New York and Ohio. The developments range in size from 60 to 352 units. On a weighted average basis, the portfolio had 93.7% of units under 80% area median income (AMI), 52.1% of units under 60% AMI and 26.8% of units under 50% AMI. Several properties were made possible by low-income housing tax credits (LIHTC) and the U.S. Department of Housing and Urban Development (HUD). The collateral pool is all seven-year capped adjustable-rate mortgages (ARMs), a new product for the platform.

Due to the characteristics of the underlying mortgage loans, the certificates are designated as "Social Bonds" within the Social Bonds Framework, published on Freddie Mac's website. Proceeds from Social Bonds are used to provide liquidity to social impact financial institutions (community development financial institutions, housing finance agencies and other financial institutions), such as MBI. These social impact financial institutions finance affordable housing to low-income communities and underserved populations consistent with the Social Bonds Framework. Freddie Mac engaged Sustainalytics, Inc., an affiliate of Morningstar, Inc., to independently evaluate the Social Bonds Framework. MCC has also created its own ESG Social Bonds Framework for use in their future deals, aligning with the four core components of the Social Bond Principles from Freddie Mac, and similarly evaluated by Sustainalytics. The ongoing assessment is based on the use of proceeds, project evaluation and selection, management of proceeds and reporting.

"It's been an honor working alongside great bankers PNC and Freddie Mac multifamily on another incredibly critical project," said Evan Gibson, Merchants Capital Senior Vice President of Capital Markets. "Merchants Capital has long pushed to find new, innovative ways to proactively increase our lending capacity for important properties across the nation. We remain steadfast in our goal to provide housing as a right for all, and the Q-series transaction helps us get there."

To learn more about Merchants Capital and its services, visit www.merchantscapital.com or find Merchants Capital on Facebook, Twitter, LinkedIn and Instagram.

ABOUT MERCHANTS BANCORP
Recognized as the best-performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business, including Federal Housing Administration ("FHA") multi-family housing and healthcare facility financing and servicing; mortgage warehouse financing; retail and correspondent residential mortgage banking; agricultural lending; and traditional community banking.  Merchants Bancorp, with $9.7 billion in assets and $7.5 billion in deposits as of March 31, 2022, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Farmers-Merchants Bank of Illinois, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbancorp.com.

ABOUT MERCHANTS CAPITAL
Established in 1990, Merchants Capital is one of the nation's top lenders for the refinance, acquisition, new construction and substantial rehabilitation of multifamily, affordable, senior and student housing. Whether you are considering tax credit syndication, Freddie Mac, Fannie Mae, HUD/FHA insured or balance sheet financing, let our personalized services help you meet your financing objectives. Experience the creativity of a small lender, with all the capabilities of a large institution. To learn more about Merchants Capital, visit www.merchantscapital.com.

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SOURCE Merchants Bancorp

FAQ

What is the significance of Merchants Capital's $214 million CMBS securitization?

The $214 million CMBS securitization boosts Merchants Capital's capacity to finance affordable housing projects, indicating strong market activity.

Where are the properties in Merchants Capital's recent $214 million transaction located?

The properties are located in Georgia, Indiana, Michigan, New York, and Ohio.

How does the recent CMBS transaction affect MBIN's stock performance?

While specific stock performance impacts depend on market response, the successful securitization could bolster investor confidence in MBIN.

What are the characteristics of the loans in Merchants Capital's recent securitization?

The loans are categorized as Social Bonds and include seven-year capped adjustable-rate mortgages.

What was unique about the recent CMBS transaction compared to the previous one?

This transaction featured 100% of the securities guaranteed by Freddie Mac, enhancing its security appeal.