NEW YORK--(BUSINESS WIRE)--Fitch Ratings has upgraded one and 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 upgrade is based on the stable performance of the underlying pool since issuance. As of the March 2016 distribution date, the pool's aggregate principal balance has been reduced by 6.8% to $1.1 billion from $1.23 billion at issuance. Per the servicer reporting, 16 loans (18% of the pool) are defeased. Fitch has designated two loans (0.2%) as Fitch Loans of Concern, and no loans have been in special servicing since issuance.
The largest loan (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 includes the following amenities: two clubhouses with lounge areas, swimming pools, tennis courts, a playground, and picnic areas. As of December 2015, occupancy was 90%.
The second largest loan (4.4%), The Park at Arlington Ridge II, is a 395-unit garden style apt complex in Arlington, VA, approximately three miles south of the Washington, DC CBD. Originally constructed in 1959, the property underwent a gut renovation between 2007 and 2009. The subject is well located within one mile of I-395 and one mile west of Reagan International Airport. The property had military and student tenant concentrations of 7% and 3%, respectively at issuance. As of December 2015, occupancy was 96%.
The third largest loan (4.2%), Casoleil Apartments, is a 346-unit garden style apartment complex in San Diego, CA. Built in 2003, the subject includes the following amenities: a library, billiard room, swimming pool and spa, fitness center, and a business center with a conference room. The subject is located near Highway 905 and I-5, approximately five miles east of two naval bases. As of December 2015, occupancy was 96%.
RATING SENSITIVITIES
The Rating Outlooks for all classes remain Stable. Based on the expectation of stable performance, Fitch does not foresee positive or negative ratings migration unless a material economic or asset level event changes the transaction's overall portfolio-level metrics.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
Fitch upgrades the following class:
--$85.8 million class B to 'Asf' from 'A-sf'; Outlook Stable.
Fitch affirms the following classes as indicated:
--$1.3 million class A-1 at 'AAAsf'; Outlook Stable;
--$963.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$964.6* 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
Exposure Draft: Counterparty Criteria for Structured Finance and Covered
Bonds (pub. 14 Apr 2016)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878412
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
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1002913
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002913
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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