Fitch Affirms FREMF 2012-K710

NEW YORK--()--Fitch Ratings has affirmed six classes of FREMF 2012-K710 Multifamily Mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-710. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are the result of stable performance of the underlying pool since issuance. The pool has had no delinquent or specially serviced loans since issuance. The pool's aggregate principal balance has been reduced by 1.90% to $1.26 billion from $1.28 billion at issuance. Fitch has designated one loan (0.71%) as a Fitch Loan of Concern.

The affirmations of the Freddie Mac K-710 certificates are based on the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes of FREMF 2012-K710.

The largest loan of the pool (10.8% of the pool) is secured by Ocean At 1 West, a 492-unit high-rise apartment complex in downtown Manhattan. The 31-story building has 4,589 square foot (sf) ground floor retail, 15,000 sf office space on the mezzanine section, a multi-level below-ground parking garage with 98 spaces and apartments on floors 14 through 31. The subject property is covered by a 421(g) tax abatement and exemption that will phase out in the fourth year of the loan term. During analysis at the time of securitization, Fitch concluded that under conservative assumptions, rental rates would likely offset the increase in real estate taxes as the abatement burns off. Fitch has not received any updated information regarding the tax abatement at this time.

The largest Fitch Loan of Concern, Cedar Ridge (0.7%), is secured by a 100-unit student housing facility serving the University of Connecticut located in Willington, CT. The servicer-reported occupancy was 64% as of year-end 2012, due to poor leasing performance of the previous management company for the 2012/2013 school year. As a result, the borrower replaced the management company in April 2013; with the change in management, the property's occupancy has increased to 96% as of December 2014. Historically the property has operated with occupancy levels around 90% and the borrower reports that the property is approximately currently 85% pre-leased for the Fall 2015/2016 academic year.

RATING SENSITIVITIES

The Rating Outlooks for all classes remain 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 'FREMF 2012-K710 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-710' (Aug. 3, 2012), available at www.fitchratings.com.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following classes:

FREMF 2012-K710 Multifamily Mortgage Pass-Through Certificates

--$93.4 million class A-1 at 'AAAsf', Outlook Stable;

--$945.5 million class A-2 at 'AAAsf', Outlook Stable;

--$93.2 million class B at 'A-sf', Outlook Stable;

--$32.1 million class C at 'BBBsf', Outlook Stable;

--$1.04* billion class X1 at 'AAAsf', Outlook Stable;

--$1.04* 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 K-710

--$93.4 million class A-1 at 'AAAsf', Outlook Stable;

--$945.5 million class A-2 at 'AAAsf', Outlook Stable;

--$1.04* billion class X1 at 'AAAsf', Outlook Stable.

Fitch does not rate the class X3 certificates.

*Notional and interest-only.

Fitch Ratings has affirmed six classes of FREMF 2012-K710 Multifamily Mortgage pass-through certificates and three classes of Freddie Mac structured pass-through

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria (pub. 10 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985452

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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
Christopher Bushart
Senior Director
+1-212-908-0606
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Christopher Bushart
Senior Director
+1-212-908-0606
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com