NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed three classes of Freddie Mac's FREMF Mortgage Trust, series 2011-K703 multifamily mortgage pass-through certificates. 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. As of the April 2015 distribution date, the pool's aggregate principal balance has been reduced by 5.5% to $1.2 billion from $1.23 billion at issuance. Per the servicer reporting, ten loans (11.3% of the pool) are defeased. Fitch has designated three loans as Fitch Loans of Concern, and no loans have been in special servicing since issuance.
The largest loan of the pool (7.1% of the pool) is secured by The Pavilions, a 932-unit garden style apt complex in Manchester, CT, approximately 10 miles east of the Hartford, CT CBD. Constructed in 1990, the subject is well located near a super regional mall and lifestyle center and boasts amenities including two clubhouses with lounge areas, swimming pools, tennis courts, a playground, and picnic areas. As per the property's rent roll, occupancy is 96% as of December 2014.
The largest Fitch Loan of Concern is Crowne At Razorback Apartments (1.19%), which consists of a 270 unit Multifamily Garden Apartment style complex located in Fayetteville, AR. There are 14 two-story or three-story buildings on the property along with a clubhouse, swimming pool and outdoor recreational area. The complex is located near the University of Arkansas. Per September 2014 reporting, property performance has declined significantly causing the DSCR to fall to A.Ax from B.Bx. The drop in performance is attributed to the property manager offering rent concessions in an effort to maintain the occupancy rate.
RATING SENSITIVITIES
The Rating Outlooks for all classes remains Stable. Due to the recent issuance of the transaction and generally 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-K703 (Sept. 15, 2011) report, 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:
--$16.5 million class A-1 at 'AAAsf', Outlook Stable;
--$963.3 million class A-2 at 'AAAsf', Outlook Stable;
--$85.8 million class B at 'A-sf', Outlook Stable;
--$978.3* million class X1 at 'AAAsf'; Outlook Stable.
Fitch does not rate the class C, X2 and X3 certificates.
*Notional and interest-only.
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
Tax-Supported Rating Criteria [686015 - 14-AUG-2012] (pub. 14 Aug 2012)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015
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=985488
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.