OREANDA-NEWS. Fitch Ratings has affirmed nine classes of FREMF 2012-K21 multifamily commercial mortgage pass-through certificates series (FREMF 2012-K21) and Freddie Mac structured pass-through certificates, series K-021. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations reflect the stable performance of the pool since issuance. There are no specially-serviced or delinquent loans in the pool. Multifamily properties represent 98.7% of the pool and one co-op property in the Murray Hill Section of Manhattan represents the remaining 1.3% of the pool. Student Housing accounts for 7.1% of the pool. This increases to 10.5% when including the loan secured by the Bell Channelside property, which is heavily occupied by students.

There was one variance from the surveillance criteria related to class B. The surveillance criteria indicated that rating upgrades were possible for this class. However, Fitch determined that upgrades were not warranted due to limited paydown, and additional leverage for several loans in the pool as they have obtained supplemental financing since closing.

The certificates represent the beneficial interests in a pool of 79 commercial mortgages secured by 79 properties. The Freddie Mac structured pass-through certificates, series K-021 (Freddie Mac SPC K-021) represents a pass-through interest in the corresponding class of the securities issued by FREMF 2012-K21 Mortgage Trust. Each Freddie Mac SPC K-021 security has the same designation as its underlying FREMF 2012-K21 class. All loans were originated by various seller/servicers according to the guidelines of the Freddie Mac Capital Markets Execution (CME) product. The certificates follow a sequential-pay structure. The affirmations of the Freddie Mac structured pass-through certificates, series K-021 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of the corresponding classes of FREMF 2012-K21.

The largest loan in the pool (5.1%) is secured by a 684-unit garden-style multifamily community located in Oakland Gardens, NY, approximately 16 miles east of the Manhattan CBD. The property was built in 1949 with unit renovations being completed on an ongoing basis as the units turn over. The property benefits from a J-51 real estate tax exemption with the majority of the units subject to New York City's rent stabilization guidelines. The servicer-reported occupancy and debt service coverage ratio (DSCR) were 98.4% and 2.90x, respectively, as of year-end 2015. This compares favorably with occupancy and DSCR of 98.5% and 2.83x, respectively, as of year-end 2014. Notably, this loan is the only full-term interest-only loan in the pool.

The second largest loan (3.6%) is secured by a 422-unit mid-rise apartment complex located in Tampa, FL on 6.75 acres of land. The property is situated within the Channelside District, south of the Crosstown Expressway and the Tampa CBD, and west of the Port of Tampa. As of year-end 2015, servicer-reported occupancy and DSCR were 92.7% and 1.58x, respectively. This compares with year-end 2014 occupancy and DSCR of 93.1% and 1.71x, respectively. Net Operating Income (NOI) has increased 6% year-over-year with the decrease in DSCR due to the end of the loan's interest-only period.

Notably one of the largest loans secured by student housing, The Cottages of Norman (2%), has experienced a decline in operating performance. The loan is on the servicer watch list as a result of this decline. As of year-end 2015, servicer-reported occupancy and DSCR were 92.2% and 1.15x, respectively. NOI has declined 19.4% year-over-year and is 17.2% below bank underwritten levels. Decreasing performance is the result of increasing expenses. Servicer commentary indicated that property management has been replaced and previously inflated marketing expense is expected to revert to normal levels. In addition to the decline in NOI, this property has obtained supplemental financing, increasing its overall leverage.

RATING SENSITIVITIES

The Rating Outlooks for all classes remains Stable. Further upgrades may occur with improved pool performance and significant paydown or defeasance, although may be limited due to future allowable financing. Downgrades to the classes are possible should overall pool performance decline.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes:

FREMF 2012-K21 Multifamily Mortgage Pass-Through Certificates

--$143 million class A-1 at 'AAAsf'; Outlook Stable;

--$968.2 million class A-2 at 'AAAsf'; Outlook Stable;

--Interest-only class X-1 at 'AAAsf', Outlook Stable;

--interest-only class X2-A at 'AAAsf' Outlook Stable;

--$68.4 million class B at 'Asf'; Outlook Stable;

--$34.2 million class C at 'BBB+sf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-021

--$143 million class A-1 at 'AAAsf', Outlook Stable;

--$968.2 million class A-2 at 'AAAsf', Outlook Stable;

--$1.1 billion* class X-1 at 'AAAsf', Outlook Stable.

Of the FREMF 2012-K21 Multifamily Mortgage Pass-Through Certificates, Fitch does not rate the interest-only X2-B, interest only class X3 or the class D certificates.

Of the Freddie Mac Structured Pass-Through Certificates, Series K-021, Fitch does not rate the interest-only class X3.

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following report:

--'FREMF 2012-K21 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-021 - Appendix' (Dec. 20, 2012).