Fitch Affirms FREMF 2011-K16 & Freddie Mac Structured Pass-Through Certificates Series K-016
KEY RATING DRIVERS
The affirmations are due to stable performance of the underlying pool. As of the July 2015 distribution date, the pool's aggregate principal balance has been reduced by 3.2% to $1.13 billion from $1.17 billion at issuance. Fitch has designated five Fitch Loans of Concern (8.6%). There are no specially serviced loans, and four loans (3.8%) are defeased.
The affirmations of the Freddie Mac SPC K-016 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 2011-K16.
The largest loan in the pool (9.3%) is secured by a 196-unit high-rise luxury apartment building located in the Upper West Side neighborhood of Manhattan. The property, built in 2010, features amenities including a concierge, full-time doorman, roof deck with BBQ grills and bar area, fitness center, tenant lounge with adjacent patio area and an event room. The servicer-reported occupancy as of December 2014 was 95% and the year-end 2014 DSCR was 1.94x.
The second largest loan in the pool (4.1%), Meridian at Braddock Station, is secured by a 480-unit, two building mid-rise apartment complex located six-miles south of Washington, D.C. The property contains a 12 and 16-story building that includes a business center, rooftop pool and sundeck, two fitness centers and concierge services. The loan is performing better than the issuer underwritten NOI of $5.4 million with a year-end 2014 NOI of $6.2 million. The servicer-reported occupancy was 91% as of December 2014.
The fourth largest loan in the pool (3.5%), Promontory Pointe, has been designated as a Fitch Loan of Concern. It is secured by 596-unit, garden-style apartment complex located in San Antonio, TX. The property is near the University of Texas Health Science Center and St. Mary's University Law School, and has typically had a high graduate student concentration. Since YE11, the property's performance has slightly declined with NOI decreasing 3.0% as of YE14. For this same period, expenses have outpaced revenues, which have been primarily driven by property taxes increasing 34.3% since YE11.
RATING SENSITIVITIES
Rating Outlooks on classes A-1 through B remain Stable due to stable performance of the underlying collateral. Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's portfolio-level metrics. Additional information on rating sensitivity is available in the report 'FREMF 2011-K16 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-016' (Dec. 6, 2011), available at www.fitchratings.com.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has affirmed the following classes:
FREMF 2011-K16 Multifamily Mortgage Pass-Through Certificates
--$96.4 million class A-1 at 'AAAsf'; Outlook Stable;
--$880.1 million class A-2 at 'AAAsf'; Outlook Stable;
--$68.8 million class B at 'A-sf'; Outlook Stable;
--$976.5 million* class X1 at 'AAAsf'; Outlook Stable;
--$976.5 million* class X2-A at 'AAAsf'; Outlook Stable.
Fitch does not rate classes C, X2-B and X3.
Freddie Mac Structured Pass-Through Certificates Series K-016
--$96.4 million class A-1 at 'AAAsf'; Outlook Stable;
--$880.1 million class A-2 at 'AAAsf'; Outlook Stable;
--$976.5 million* class X1 at 'AAAsf'; Outlook Stable;
Fitch does not rate the class X3 certificates.
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