Fannie Mae (FNMA/OTCQB) successfully priced its fourth Multifamily DUS® REMIC of 2019, known as FNA 2019-M5, on April 9, 2019, securing $820.9 million through its Fannie Mae Guaranteed Multifamily Structures (Fannie Mae GeMS™) program. This deal underscores Fannie Mae’s continued activity in the mortgage-backed securities market and its strategic approach to structuring these offerings.
Key Highlights of the FNA 2019-M5 Transaction
Dan Dresser, Vice President, Multifamily Capital Markets, Trading & Credit Pricing at Fannie Mae, highlighted the strategic elements of this offering, noting the use of the A3 structure to enhance call protection for investors. He also pointed to the strong investor demand for the near par, fixed-coupon A2 tranche, especially in a market where such par paper was scarce. This FNA 2019-M5 deal marked a robust start to the quarter for Fannie Mae’s Multifamily Capital Markets activities.
Understanding the FNA 2019-M5 Structure
The FNA 2019-M5 REMIC is structured into multiple tranches, each with varying characteristics to meet diverse investor needs. All classes within FNA 2019-M5 are guaranteed by Fannie Mae, ensuring the timely payment of both interest and principal. The table below details the structure of this multi-tranche offering:
| Class | Original Face | Weighted Average Life | Coupon (%) | Coupon Type | Spread | Offered Price |
|---|---|---|---|---|---|---|
| A1 | $51,800,000 | 5.89 | 3.009 | FIX | S+44 | 100.99 |
| A2 | $579,190,923 | 9.60 | 3.273 | FIX | S+62 | 101.49 |
| A3 | $190,000,000 | 9.78 | 3.294 | FIX | S+58 | 101.99 |
| X | $630,990,923 | 8.84 | 0.511 | WAC | Not offered | Not offered |
| X3 | $190,000,000 | 9.28 | 0.469 | WAC | Not Offered | Not Offered |
| Total | $820,990,923 |
Note: FIX = Fixed Rate, WAC = Weighted Average Coupon, Spread is relative to swaps (S).
This structure allowed Fannie Mae to appeal to a broad spectrum of investors with different risk appetites and investment horizons. The varying weighted average lives and coupon rates across tranches provide options for both short-term and longer-term investment strategies.
Collateral Composition of the 2019 M5 REMIC
The security is backed by a substantial and diversified collateral pool. Key characteristics of the Group 1 Collateral for FNA 2019-M5 include:
| UPB | $820,990,923 |
|---|---|
| Collateral | 86 Fannie Mae DUS MBS |
| Geographic Distribution | CA (16.5%), TX (12.4%), NY (10.8%) |
| Weighted Average Debt Service Coverage Ratio (DSCR) | 1.50x |
| Weighted Average Loan-to-Value (LTV) | 64.7% |
The collateral consisted of 86 Fannie Mae DUS MBS (Mortgage-Backed Securities), indicating a portfolio of multifamily mortgages under Fannie Mae’s Delegated Underwriting and Servicing (DUS) program. Geographically, the properties are well-distributed across major markets including California, Texas, and New York, reducing concentration risk. Furthermore, the healthy Weighted Average Debt Service Coverage Ratio (DSCR) of 1.50x and a conservative Weighted Average Loan-to-Value (LTV) of 64.7% suggest a strong and stable underlying asset base for the 2019 M5 securities.
Further Information
For investors and market participants seeking more detailed information, the Fannie Mae GeMS REMIC Term Sheet (FNA 2019-M5) is available on the Fannie Mae GeMS Archive page. This document provides comprehensive details about the offering, structure, and collateral.
Disclaimer: It is important to note that this release contains forward-looking statements and not all securities possess the characteristics detailed herein. Investors should consult the prospectus and related supplements before making any investment decisions and review Fannie Mae’s filings with the SEC for comprehensive financial information.
This FNA 2019-M5 REMIC deal in April 2019 reflects Fannie Mae’s ongoing role in supporting the multifamily housing market through innovative financing solutions and providing diverse investment opportunities in mortgage-backed securities.
