Fitch Affirms FREMF 2014-K38 & Freddie Mac Structured Pass-Through Ctfs Series K-038

NEW YORK--()--Fitch Ratings has affirmed six classes of FREMF 2014-K38 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates series K-038. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations of Freddie Mac 2014-K38 are based on the stable performance of the underlying collateral. As of the May 2015 distribution date, the pool's aggregate principal balance has been reduced by 0.6% to $1.23 billion from $1.24 billion at issuance. Fitch has designated one Fitch Loan of Concern (0.6%). No loans have been in special servicing since issuance and none are defeased.

The affirmations of the Freddie Mac Series K-038 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 2014-K38.

The largest loan (6.2% of the pool) is secured by a 780-unit garden and townhouse style apartment community located in Gahanna, OH in the northeastern portion of Columbus, OH. It is comprised of 70 two- and three-story apartment buildings that were constructed in four phases from 2005 - 2013. As of year-end (YE) 2014, the servicer reported occupancy and Debt Service Coverage Ratio (DSCR) were 92.0% and 1.75x, respectively.

The second largest loan (4.8% of the pool) is secured by 578-unit high rise apartment complex located in the Upper East Side of Manhattan, NY. Approximately 60% of the tenant base is currently under the Mitchell-Lama Section 8 Voucher Program. As of twelve months ended Sept. 30, 2014, the servicer reported occupancy and DSCR were 93.6% and 2.10x, respectively.

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 2014-K38 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series 2014 K-038' (June 11, 2014), 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 2014-K38 Multifamily Mortgage Pass-Through Certificates

--$162,064,771 class A-1 at 'AAAsf'; Outlook Stable;

--$887,556,000 class A-2 at 'AAAsf'; Outlook Stable;

--$1,049,620,771* class X1 at 'AAAsf'; Outlook Stable;

--$58,925,000 class B at 'Asf'; Outlook Stable;

--$31,013,000 class C at 'BBB+sf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates Series K-038

--$162,064,771 class A-1 at 'AAAsf'; Outlook Stable;

--$887,556,000 class A-2 at 'AAAsf'; Outlook Stable;

--$1,049,620,771* class X1 at 'AAAsf'; Outlook Stable.

*Notional amount and interest-only.

Of FREMF 2014-K38, Fitch does not rate the $183.0 million interest-only class X3 or the $93.0 million class D. Of the Freddie Mac Structured Pass-Through Certificates, Series K-038, Fitch does not rate the $183.0 million interest-only class X3.

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

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=986694

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=986694

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
Tiffany Pierce
Associate Director
+1-212-908-9107
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
Tiffany Pierce
Associate Director
+1-212-908-9107
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