Fitch Affirms FREMF 2011-K10

NEW YORK--()--Fitch Ratings has affirmed one class of Freddie Mac's FREMF Mortgage Trust, series 2011-K10 multifamily mortgage pass-through certificates. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmation is based on stable performance of the underlying pool since issuance. As of the July 2014 distribution date, the pool's aggregate principal balance has been reduced by 7.8% to $1.07 billion from $1.17 billion at issuance. The pool has experienced no realized losses to date. Per the servicer reporting, two loans (2.3% of the pool) are defeased. Fitch has designated three loans (2.9%) as Fitch Loans of Concern.

The largest Fitch Loan of Concern (FLOC) is the Longhorn Landing Phase II loan (1.3% of the pool), which is secured by 270 unit, 810-bed, student housing apartment complex located in Austin, TX. The property is four miles from the University of Texas for which it serves via a shuttle bus. The servicer-reported debt service coverage ratio (DSCR) declined to 1.05x at YE 2013 from 1.46x at YE 2012. The decline in the DSCR was due to an increase in expenses primarily associated with advertising and utilities.

The next loan of concern is the Longhorn Landing Phase I loan (1.2% of the pool), which is secured by a 252 unit, 684-bed, student housing apartment complex located in Austin, TX. The property is adjacent to the Longhorn Phase II property. The servicer-reported DSCR declined to 0.94x at YE 2013 from 1.31x at YE 2012. The decline in the DSCR was due to an increase in operating expenses primarily associated with repairs and maintenance.

The remaining loan of concern is the Village Apartments loan (0.4%), which is secured by a 102-unit garden-style apartment complex located in Conway, AR. The property's performance has been declining since 2011 due to a decrease in occupancy. The servicer-reported occupancy was at 77.5% as of YE 2013 and at 95.1% as of YE 2011. For the same period, the servicer-reported DSCR decreased from 1.56x to 1.18x, respectively.

RATING SENSITIVITIES

The Rating Outlook on class B 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 overall portfolio-level metrics. Additional information on rating sensitivity is available in the 'FREMF 2011-K10 Multifamily Mortgage Pass-Through Certificates, available at www.fitchratings.com.

Fitch affirms the following classes as indicated:

--$68.5 million class B at 'A-sf'; Outlook Stable.

Fitch does not rate the class C, X2 and X3 certificates.

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' (Aug. 4, 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=754389

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=850755

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.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1 212-908-0785
or
Media Relations, New York
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

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Contacts

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