Hannon Armstrong and Morgan Properties Acquire B-Piece on KG-Series Securitization

Hannon Armstrong (NYSE: HASI), a leading investor in climate change solutions, and Morgan Properties, a real estate investment and management company, today announced a new joint venture that will acquire the B-Piece from Freddie Mac’s previously settled KG series focused on environmental and social impact, and part of Freddie Mac’s flagship K-Deal program. The issuance, K-G02, is exclusively comprised of securitized workforce housing loans made through Freddie Mac’s Green Advantage program which requires borrowers to make energy and/or water efficiency improvements to their properties.

“We are pleased to partner with Morgan Properties on what is our first-ever transaction with Freddie Mac,” said Hannon Armstrong Chief Investment Officer Nathaniel J. Rose. “Expansion into this new asset class will further diversify our portfolio and bolster our efforts to decarbonize buildings, including multi-family properties.”

“Morgan Properties continues to be one of the nation’s most active multifamily investors and we have demonstrated our ability to invest across the capital stack. Over the past two years, we have closed on eight Freddie Mac K-Series Deals secured by over $7 billion of multifamily loans,” said Jason Morgan, Principal at Morgan Properties. “We are extremely excited about the partnership with Hannon Armstrong – we see tremendous value in this relationship, support the company’s mission to counteract climate change and are thrilled to close on the first of many deals together.”

At closing, the total loan balance represented by the K-G02 Multifamily Mortgage Pass-Through Certificates was approximately $544 million and the unguaranteed B-Piece that Hannon Armstrong and Morgan Properties acquired had a face amount of approximately $41 million. K-G02 is represented by a well-diversified, high credit-quality portfolio of 17 multifamily properties located across 12 states.

Freddie Mac Multifamily is a leading issuer of agency-guaranteed structured multifamily securities. K-Series Deals are part of Freddie Mac’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds, such as the B-Piece. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.