Fitch Affirms FREMF 2012-K705 and Freddie Mac Pass-Through Certificates, Series K-705

NEW YORK--()--Fitch Ratings has affirmed all five classes of FREMF 2012-K705 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-705. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations are based on the stable performance of the underlying collateral pool. As of the January 2012 remittance, the pool has had no delinquent or specially serviced loans. Fitch has designated one loan as a Fitch Loan of Concern. The pool's aggregate principal balance has been paid down by 0.32% to $1.2 billion from $1.2 billion at issuance. All of the loans reported year-end (YE) 2011 or rolling 12-month-to-issuance financials and 51 of the loans (73% of the pool) reported partial year 2012 financials. The pool's overall net operating income (NOI) has been stable with a 5% NOI increase since issuance.

The largest loan of the pool (9.83%) is secured by The Enclave, a 1,119-unit three-building apartment complex located in Silver Spring, MD. The prior owner instituted a major interior and exterior capital plan from 2003 through 2009. The apartment complex amenities include a swimming pool, tennis courts, a volleyball court, and three concierge desks. The complex is situated along Columbia Pike and has access to three metro stations within a five-mile radius of its location.

The second largest loan (4.65%) is secured by Crosswinds at Rolling Road, a 803-unit town-home-style apartment complex situated eight miles from Baltimore's CBD. The subject is located in the Woodlawn submarket of Baltimore and benefits from the diversified employment base of defense, life science, financial, and business service companies. The property recently underwent significant capital improvements that included replacement of all roofs, new paint on exterior shutters and doors, along with re-striping of the parking lot.

The third largest loan (3.34%) is secured by a 1,008-unit apartment complex, University Village Apartments, located in Columbus, OH, one mile from the Ohio State University. The close proximity to the university has led to a historically low vacancy rate of 1%-3%. The property requires parental guarantees for all occupants other than those with full-time employment, which mitigates bad debt loss. The property is comprised of 54 three-story apartment buildings. The amenities offered include a fitness center, computer lab, swimming pool, laundry facilities, tanning booths, and shuttle service to campus.

Fitch has affirmed the following classes as indicated:

FREMF 2012-K705 Multifamily Mortgage Pass-Through Certificates
--$91.1 million class A-1 at 'AAAsf'; Outlook Stable;
--$936.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$1 billion class X1 at 'AAAsf'; Outlook Stable;
--68.8 million class B at 'Asf'; Outlook Stable;
--30.6 million class C at 'BBB+sf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-705
--$91.1 million class A-1 at 'AAAsf'; Outlook Stable;
--$936.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$1 billion class X1 at 'AAAsf'; Outlook Stable;

*Notional amount and interest only.

Of FREMF 2012-K705, Fitch does not rate the 1.2 billion interest-only class X2, the $191 million interest-only class X3 or the $91.7 million class D. Of the Freddie Mac Structured Pass-Through Certificates, Series K-705, Fitch does not rate the $191 million interest-only X3.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (June 6, 2012);
--'Surveillance Methodology for U.S. Fixed-Rate CMBS Transactions' (Dec. 21, 2011).

Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923

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Contacts

Fitch Ratings
Primary Analyst:
Jay Bullie, +1-312-368-2079
Associate Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst:
Jay Bullie, +1-312-368-2079
Associate Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson:
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations:
Brian Bertsch, +1-212-908-0549
brian.bertsch@fitchratings.com
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com