Fitch Affirms Freddie Mac 2012-K18 & Freddie Mac Structured Pass-Through Certificates K-018

NEW YORK--()--Fitch Ratings has affirmed five classes of Freddie Mac 2012-K18 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, K-018. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations of Freddie Mac 2012-K18 are based on the stable performance of the underlying collateral. As of the March 2014 distribution date, the pool's aggregate principal balance has been reduced by 1.8% to $1.19 billion from $1.21 billion at issuance. Fitch has designated one loan (1.2%) as a Fitch Loan of Concern, and there are no specially serviced or defeased loans in the pool.

The affirmations of the Freddie Mac K-018 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes for FREMF 2012-K18.

The Fitch Loan of Concern, Envision Apartments (1.2%% of the pool), is secured by a 408-unit student housing property located in Akron, OH. The property was built in 1969, renovated in 2011 and is adjacent to the University of Akron. As per the property's financials, the third-quarter 2013 debt service coverage ratio (DSCR) dropped to 1.17x from 1.54x as of year-end 2012. The primary driver of the decline in DSCR is attributed to an approximate 23% increase in expenses on an annualized basis. However, the servicer-reported occupancy has increased to 93.7% as of year-end 2013 from 83.2% as of year-end 2012.

The largest loan of the pool (7.1%) is secured by Central Astoria Apartments, a 100% rent stabilized, 894-unit garden-style apartment complex located in Astoria, New York. The property is located close to several major highways, within 10 minutes of LaGuardia Airport, and less than a 30-minute subway ride into Manhattan. As per the property's rent roll, the occupancy was 99% at year-end 2013.

The second largest loan (5.7%) is secured by Aldingbrooke Terrace-Townhomes, a 667-unit garden-style and townhome complex located in West Bloomfield, MI. The property was improved in 2010 with 78 two- and three-story apartment buildings and a single-story clubhouse. The property lacks competition in the submarket due to the large unit sizes compared to its competitors. As per the property's rent roll, the occupancy increased slightly to 88.9% as of year-end 2013 from 85% as of year-end 2012.

RATING SENSITIVITY

All classes maintain Stable Outlooks. 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. Additional information on rating sensitivity is available in the report 'FREMF 2012-K18 Freddie Mac 2012-K18' (May 31, 2012), available at www.fitchratings.com.

Fitch affirms the following classes as indicated:

FREMF 2012-K18 Multifamily Mortgage Pass-Through Certificates

--$138.5 million class A-1 at 'AAAsf'; Outlook Stable;

--$887.5 million class A-2 at 'AAAsf'; Outlook Stable;

--$74.3 million class B at 'A-sf'; Outlook Stable;

--$1.026 billion* class X1 at 'AAAsf'; Outlook Stable;

--$1.026 billion* class X2-A at 'AAAsf'; Outlook Stable.

Fitch does not rate classes C, X3 and X2-B certificates.

Freddie Mac Structured Pass-Through Certificates, Series K-018

--$138.5 million class A-1 at 'AAAsf'; Outlook Stable;

--$887.5 million class A-2 at 'AAAsf'; Outlook Stable;

--$1.026 billion* class X1 at 'AAAsf'; Outlook Stable.

*Notional amount and interest only.

Fitch does not rate the X3 class certificate.

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-K18 Multifamily Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-018 -- Appendix' (May 31, 2012).

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=826526

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Sean Gibbs, +1-212-908-0311
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Sean Gibbs, +1-212-908-0311
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Committee Chairperson
Mary MacNeill, +1-212-908-0785
Managing Director
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com