Fitch Affirms FREMF 2014-K36 & K-036

CHICAGO--()--Fitch Ratings has affirmed all rated classes of FREMF 2014-K36 multifamily pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-036. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are due to stable performance of the underlying pool. No loans have been delinquent or specially serviced since issuance. As of the January 2015 distribution date, the pool's aggregate principal balance has been reduced by 0.5% to $1.25 billion. No loans are defeased.

The affirmations of the Freddie Mac structured pass-through certificates, series K-036 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of the corresponding classes of FREMF 2014-K36.

The largest loan in the pool (7.2%) is secured by a 357-unit mid-rise apartment complex located in San Jose, CA. The property was built in 2013 and consists of a four-story residential building over a subterranean parking garage. It is the second phase of a six phase development. Amenities are shared among all phases and include: seven saltwater pools and spas, a fitness center with a spin, yoga and aerobics room, a five-acre park, a clubhouse, internet cafe, a movie theater with seating for 23, a basketball court, and two tennis courts. As of September 2014, the debt service coverage ratio (DSCR) was reported to be 1.82x. And occupancy was reported to be 96%.

The second largest loan (4.9%) is secured by a 552-unit, townhome and garden-style apartment complex located in Dublin, OH, which is roughly 15 miles northwest of the Columbus CBD. The property was developed in two phases in 2010 and 2013 and is improved with 53 two- and three-story apartment buildings, a fitness center, clubhouse/community center with rental office, full service bar/restaurant, sand volleyball courts, and a swimming pool. Updated financial information was not available. At issuance, the occupancy and DSCR was reported to be 91% and 1.27x, respectively.

The third largest loan (4.4%) is secured by a 528-unit, garden style and townhome apartment complex located in Carrollton, TX, which is within the Dallas-Fort Worth MSA. The subject, built in two phases in 1998 and 2001, is improved with 51 two- and three-story apartment buildings, clubhouse, fitness center and maintenance shop building. As of September 2014, the DSCR was reported to be 1.63x. The occupancy has improved to 95% compared to 92% at issuance.

RATING SENSITIVITIES

The Rating Outlooks remain Stable for all classes due to the transaction performing in-line with expectations at issuance. 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 2014-K36 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K036' (Feb. 4, 2014), available at www.fitchratings.com

Fitch affirms the following classes as indicated:

FREMF 2014-K36 Multifamily Mortgage Pass-Through Certificates

--$188.5 million class A-1 at 'AAAsf', Outlook Stable;

--$865.4 million class A-2 at 'AAAsf', Outlook Stable;

--$1.1 billion* class X1 at 'AAAsf', Outlook Stable;

--$1.1 billion* class X2-A at 'AAAsf', Outlook Stable;

--$69 million class B at 'Asf', Outlook Stable;

--$31.4 million class C at 'BBB+sf', Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-036

--$188.5 million class A-1 at 'AAAsf', Outlook Stable;

--$865.4 million class A-2 at 'AAAsf', Outlook Stable;

--$1.1 billion* class X-1 at 'AAAsf', Outlook Stable.

*Notional amount and interest-only.

Of the FREMF 2014-K36 multifamily mortgage pass-through certificates, Fitch does not rate the interest-only X2-B, interest only class X3 or the class D certificates.

Of the Freddie Mac Structured Pass-Through Certificates, Series K-021, Fitch does not rate the interest-only class X3.

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 2014-K36 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-036 - Appendix' (Feb. 4, 2014).

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 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. 10, 2014).

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=812608

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978749

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
Daniel Anderson
Associate Director
+1-312-368-2305
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
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

Contacts

Fitch Ratings
Primary Analyst
Daniel Anderson
Associate Director
+1-312-368-2305
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
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