NEW YORK--(BUSINESS WIRE)--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 2015 distribution date, the pool's aggregate principal balance has been reduced by 0.81% to $1.454 billion from $1.466 billion at issuance. 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.
Fitch has designated one Loan of Concern which is secured by a 200 unit multifamily property located in Tallahassee, FL (0.40% of the pool). Property performance has declined since issuance due to competition from new supply in the market. As of year to date (YTD) September 2014, debt service coverage ratio (DSCR) reported at 0.72x with occupancy at 83%, a decline from 1.37x DSCR and 96.5% occupancy at issuance. According to the servicer, the borrower has had to lower rates and offer leasing incentives to attract new tenants and keep existing ones. The loan remains current as of the March 2015 payment date.
The largest loan of the pool (8.5%) is secured by East Coast 4, a leasehold interest in a 367-unit high-rise apartment complex located in Long Island City, 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. Occupancy continues to remain strong at the property reporting at 99% per the November 2014 rent roll, in line with issuance at 100%. The DSCR improved to 2.42x for YTD September 2014, compared to 2.32x at year end December 2013 and 2.24x at 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 reporting the property's occupancy has improved to 95% as of September 2014, compared to 89.8% as of December 2013 and 83.3% at issuance. Despite the higher occupancy, the DSCR has steadily declined since issuance reporting at 1.74x as of YTD September 2014, compared to YE 2013 at 2.50x and issuance at 2.61x. Base rents for YTD September 2014 have declined 14.7% since YE 2013, and approximately 13% since issuance.
RATING SENSITIVITIES
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
--$177.7 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
--$177.7 million class A-1 at 'AAAsf'; Outlook Stable;
--$1.1 billion class A-2 at 'AAAsf'; Outlook Stable;
--$1,234* billion class X1 at 'AAAsf'; Outlook Stable.
Fitch does not rate the class X3 certificate.
*Notional amount and interest-only.
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' (March 2015);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).
Applicable Criteria and Related Research:
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982718
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