Fitch Affirms FREMF 2013-K35 & FREMF 2013 K-035

NEW YORK--()--Fitch Ratings affirms FREMF 2013-K35 multifamily pass-through certificates series and three classes of Freddie Mac structured pass-through certificates, series K-035.

KEY RATING DRIVERS

The affirmations are due to stable performance of the underlying pool. Fitch has designated four loans as Fitch Loans of Concern, which are currently on the master servicer's watchlist. All of the loans in the pool have a final maturity date in 2023. As of the October 2015 distribution date, the pool's aggregate principal balance has been reduced by 1.8% to $1.50 billion from $1.53 billion at issuance.

The affirmations of the Freddie Mac SPC K-035 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 2013-K35.

The largest loan in the pool is the Atrium Resort loan (10.5% of the pool), which is secured by a 1,520-unit, garden-style apartment community in Pembroke Pines, FL, about 15 miles southwest of the Fort Lauderdale CBD. The property consists of 190, two-story apartment buildings constructed from 1985-1990, along with a clubhouse/leasing office, two car-wash buildings, a fitness center/activity center building, one guardhouse and 17 detached garage buildings, situated on 84.63 acres. The property is performing better than the issuer underwritten net operating income (NOI) of $11.9 million, with a trailing 12 months (TTM) June 2015 NOI of $13.5 million. The most recent servicer reported occupancy is 92.8% as of June 2015.

The second largest loan in the pool is the Westdale Hills loan (4.5%), secured by a 2,141-unit, garden-style apartment community in Euless, TX within the Dallas-Fort Worth MSA. The property consists of 267 one, two and three-story apartment buildings, one clubhouse/leasing office building, one day care center building, a fitness center building and a nine-hole golf course situated on 154.61 acres. The property was constructed between 1968 and 1984 and underwent renovation from 2008-2012 in the amount of $4.3 million. The property is performing better than the issuer underwritten NOI of $6.5 million with a year-end (YE) 2014 NOI of $7.1 million. The most recent servicer reported occupancy was 94% as of December 2014.

The third largest loan in the pool is the Waterford Place Apartments loan (4.1%), secured by a 390-unit, garden-style apartment community in Dublin, CA within the Oakland-East Bay MSA. The property is composed of five, four-story apartment buildings built in 2001, along with a clubhouse/leasing office building, 41 open parking lot spaces and 684 garage parking spaces, situated on 8.28 acres. The property is performing better than the underwritten NOI of $5.8 million with a year-end TTM June 2015 NOI of $7 million. The most recent servicer reported occupancy is 97% as of June 2015.

RATING SENSITIVITIES

Rating Outlooks on classes A-1 through C remain Stable due to stable performance of the underlying collateral. 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-K35 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-035' (Nov. 18, 2013), 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 ratings:

FREMF 2013-K35 Multifamily Mortgage Pass-Through Certificates

--$193.4 million class A-1 at 'AAAsf', Outlook Stable;

--$1.1 billion class A-2 at 'AAAsf', Outlook Stable

--$99.5 million class B at 'A-sf', Outlook Stable;

--$38.3 million class C at 'BBBsf', Outlook Stable;

--$1.3 billion* class X1 at 'AAAsf', Outlook Stable;

--$1.3 billion* class X2-A at 'AAAsf', Outlook Stable.

*Notional amount and interest-only.

Fitch does not rate the class D, X-2B and X3 certificates.

Freddie Mac Structured Pass-Through Certificates, Series K-035

--$193.4 million class A-1 at 'AAAsf', Outlook Stable;

--$1.1 billion class A-2 at 'AAAsf', Outlook Stable;

--$1.3 billion* class X1 at 'AAAsf', Outlook Stable.

*Notional amount and interest-only.

Fitch does not rate the class X3 certificates.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873395

Related Research

FREMF 2013-K35 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-035 - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724036

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=995294

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=995294

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Lisa Cook
Director
+1-212-908-0665
Fitch Ratings, Inc.
33 Whitehall St.
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
Lisa Cook
Director
+1-212-908-0665
Fitch Ratings, Inc.
33 Whitehall St.
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