Fitch Affirms Freddie Mac 2012-K17 and Freddie Mac Structured Pass-Through Certificates K-017
KEY RATING DRIVERS
The affirmations of the Freddie Mac 2012-K17 are based on the stable performance of the underlying collateral pool. As of the January 2016 remittance, the pool had no delinquent or specially serviced loans since issuance. The pool's aggregate principal balance has been paid down by 4.0% to $1.221 billion from $1.272 billion at issuance. All 72 loans reported at least partial year 2015 financial statements. Based on full year 2015 or annualized 2015 financial statements, the pool's overall net operating income (NOI) improved 22.6% since issuance. Only one loan (0.7%) is on the servicer's watchlist due to a significant drop in the property's net operating income (NOI). Three loans (2.0%) are defeased.
Concentrations in the pool include 15.6% full-term interest-only loans and 42.6% partial term interest-only, as well as 8.3% collateralized by student housing and an additional 1.8% collateralized by an assisted living facility. The three largest geographic concentrations for the transaction are the Los Angeles, CA MSA (20.0%), Seattle-Tacoma-Bellevue, WA (7.4%), and Baton Rouge, LA (7.3%)
The affirmations of the Freddie Mac K-017 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of the A-1 and A-2 classes.
The loan on the servicer's watchlist is Stillwater Flats (0.7%), collateralized by a 174 unit student housing complex located in Stillwater, OK. The loan was placed on the watchlist in September 2014 for the debt service coverage ratio (DSCR) falling to 0.91x after the interest-only period ended after the initial 24 months of the loan's term. During 2014, occupancy fell to 86% and expenses increased as the sponsor worked to secure residents for the 2015 school year. The sponsor succeeded at increasing room rental rates and normalizing expenses in 2015. Although NOI continues to be lower than issuance, the subject's DSCR improved to 1.09x as of third quarter 2015.
The largest loan of the pool (15.2%) is secured by Park Newport, a 1,306-unit four building apartment complex located in Newport Beach, CA. The apartment complex amenities include a movie theater, lounge, fitness center, market, and a dry cleaning facility. The development is situated overlooking Upper Newport Bay and is in close proximity to Fashion Island Mall which is a shopping and dining destination in Orange County, CA. The borrower recently made a significant investment in the interior and exterior upgrades of the structures ensuring that the complex maintains its competitiveness with other premier complexes in the area. As of Sept. 2015, the reported occupancy and DSCR were 90% and 2.64x, respectively.
The second largest loan (5.2%) is secured by Cottages of Baton Rouge, a 382-unit, 1,290-bed student housing complex serving Louisiana State University. The property is of superior quality to the neighboring competing assets. A new phase of student housing development was recently completed and the community boasts a full complement of amenities to the residents including weight room, fitness studio, study lounge, pool and tanning stalls. Development of competing assets has been minimal and demand for this product should continue to be strong as more than 20,000 students at the university live off campus. As of June 2015, the reported occupancy and DSCR were 98% and 1.46x, respectively.
RATING SENSITIVITIES
The Rating Outlook for all classes remains Stable. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's portfolio-level metrics.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch affirms the following classes:
FREMF 2012-K17 Multifamily Mortgage Pass-Through Certificates
--$105.8 million class A-1 at 'AAAsf'; Outlook Stable;
--$926 million class A-2 at 'AAAsf'; Outlook Stable;
--$1.031 billion class X1 at 'AAAsf'; Outlook Stable;
--$187.7 million class X2-A at 'AAAsf'; Outlook Stable;
--$92.2 million class B 'A-sf'; Outlook Stable.
Fitch does not rate classes C, interest-only class X2-B, and interest-only class X3.
Freddie Mac Structured Pass-Through Certificates, Series K-017
--$105.8 million class A-1 at 'AAAsf'; Outlook Stable;
--$926 million class A-2 at 'AAAsf'; Outlook Stable;
--$1.031 billion class X1 at 'AAAsf'; Outlook Stable.
Fitch does not rate interest-only class X3.
Комментарии