Fitch Affirms FREMF 2013-K26 & Freddie Mac SPCs, Series K026

NEW YORK--()--Fitch Ratings has affirmed six classes of FREMF 2013-K26 multifamily mortgage pass-through certificates series and three classes of Freddie Mac structured pass-through certificates, series K026. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations of Freddie Mac 2013-K26 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 0.30% to $1.461 billion from $1.466 billion at issuance. Fitch has not designated any loans as Fitch Loans of Concern, and no loans are in special servicing.

The affirmations of the Freddie Mac K026 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes of FREMF 2013-K26.

The largest loan of the pool (8.4%) is secured by East Coast 4, a leasehold interest in a 367-unit high-rise apartment complex located in Long Island City, Queens, NY. The property is part of a larger site that represents the second phase of a master-planned project located along the East River in Hunters Point. As per the property's rent roll, occupancy has remained approximately 100% since issuance.

The second largest loan (3.7%), Oakwood Falls Church, is secured by a 567-unit mid-rise apartment complex located in Falls Church, VA, that is primarily used for corporate housing. The complex includes four residential buildings, a leasing office, conference rooms, business center and club room, a convenience store, a dry cleaner, a pro tennis shop, tennis and basketball courts, and a beach volleyball court. As per the servicer, the property's occupancy increased slightly to 96.9% as of September 2013 from 95% as of year-end 2012.

Occupancy on the third largest loan remains stable. The fourth largest loan (3.2%), Granby and Olympia Mills Student Apartments, a student housing facility in Columbia, SC, less than one mile away from the University of South Carolina has seen an occupancy decline. The property was converted from a historic cotton mill built in 1895, to a 1,050-bed student housing complex. As of the third-quarter 2013, the property's occupancy declined slightly to 94.2% from 100% as of February 2013. Leases are on 12-month terms that begin in August of each year.

RATING SENSITIVITY

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. Additional information on rating sensitivity is available in the report 'FREMF 2013-K26 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series 2013-K26' (April 16, 2013), available at www.fitchratings.com.

Fitch affirms the following classes:

FREMF 2013-K26 Multifamily Mortgage Pass-Through Certificates

--$185.2 million class A-1 at 'AAAsf'; Outlook Stable;

--$1.1 billion class A-2 at 'AAAsf'; Outlook Stable;

--$73.3 million class B at 'Asf'; Outlook Stable;

--$36.7 million class C at 'BBB+sf'; Outlook Stable;

--$1,242* billion class X1 at 'AAAsf'; Outlook Stable;

--$1,242* billion class X2-A at 'AAAsf'; Outlook Stable.

Fitch does not rate the class D, X2-B and X3 certificates.

Freddie Mac Structured Pass-Through Certificates, Series K026

--$185.2 million class A-1 at 'AAAsf'; Outlook Stable;

--$1.1 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1,242* billion class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate the class X3 certificate.

*Notional amount and interest-only.

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 2013-K26 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series 2013-K26 -- Appendix' (April 16, 2013).

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=827647

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

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Contacts

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