Fitch Affirms FREMF Mortgage Trust Series 2010-K9 Pass-Through Certificates

CHICAGO--()--Fitch Ratings has affirmed one class of Freddie Mac's FREMF Mortgage Trust series 2010-K9 multifamily mortgage pass-through certificates. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmation of Freddie Mac's FREMF 2010-K9 is based on the overall stable performance of the underlying collateral pool. As of the July 2014 remittance, the pool had one delinquent and specially serviced loan (0.8%). Fitch has not designated any performing loans as Fitch Loans of Concern. One loan (1.4%) is on the master servicer's watchlist due to an increase in operating expenses.

The pool's aggregate principal balance has been paid down by 7.5% to $1.2 billion from $1.3 billion at issuance. The top 15 loans reported full-year 2013 financials. Based on full-year financial statements, the pool's overall net operating income (NOI) improved 16.6% since issuance and 10.3% over 2012 reported financials.

The specially-serviced loan is secured by 124-unit (348-bed) student housing complex located in Mt. Pleasant, MI, near the campus of Central Michigan University. The property transferred to special servicing in September 2013 due to monetary default. The subject has suffered from significant new supply in the submarket along with declining enrollment at Central Michigan University. A receiver was appointed to the property during the first quarter of 2014 to improve the subject's performance. A number of deferred maintenance issues have been addressed at the property. Per the receiver, preleasing for the 2014-15 school year has improved. The special servicer and sponsor continue to negotiate on a deed-in-lieu of foreclosure.

The largest loan in the pool (7.6% of the pool) is secured by, The Medici Apartments, 632-unit mid-rise apartment complex located in Los Angeles, CA. The property, built in two phases, was completed in 2002 and a renovation was recently finished in 2008. Students attending The University of Southern California and the Fashion Institute of Design comprise a large percentage of the complex's residents. The development offers numerous amenities and is close proximity to the leisure attractions residing in the Los Angeles central business district (CBD).

The second largest loan in the pool (7.2%) is secured by Domus Apartments, a 290-unit apartment building located in the Center City submarket of Philadelphia, PA. The subject has a large percentage of college students due its proximity to the University of Pennsylvania and Drexel University. The property's high-end amenities including a courtyard pool, media room, conference rooms, and 24 hour fitness center also attract a diverse tenant base that includes young professionals and families. The complex's location allows convenient accessibility to Philadelphia's CBD and broader metropolitan area via the SEPTA transportation system.

RATINGS SENSITIVITIES

The Rating Outlook remains Stable for the rated class. Due to the recent issuance of the transaction and stable performance, Fitch does foresee ratings migration until a material economic or asset level event changes the transaction's overall portfolio-level metrics.

Fitch has affirmed the following class:

--$65.5 million class B at 'A-sf'; Outlook Stable.

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

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'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=748821

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=841192

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Contacts

Fitch Ratings
Primary Analyst
Jay Bullie
Associate Director
+1-312-368-2079
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Jay Bullie
Associate Director
+1-312-368-2079
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com