Fitch Affirms FREMF 2012-K19 & Freddie Mac Structured Pass-Through Certificates K-019

NEW YORK--()--Fitch Ratings has affirmed six classes of FREMF 2012-K19 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates series K-019. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are the result of the stable performance of the underlying pool collateral since issuance. As of the April 2016 distribution date, the pool's aggregate principal balance has been reduced by 5.8% to $2.21 billion from $2.35 billion at issuance. Per the servicer reporting, four loans (4.4% of the pool) are defeased.

The affirmations of the Freddie Mac series K-019 certificates are based on the pass-through nature of the certificates, as they are dependent on the underlying ratings of the corresponding classes of FREMF 2012-K19.

The pool has experienced no realized losses to date and there are no loans in special servicing. There are three loans (4.5%) on the servicer's watchlist, of which two loans (1.8%) have been designated as Fitch Loans of Concern. The collateral securing both loans have suffered fire damage, which has forced several units offline. Fitch will continue to monitor the loans for any deterioration in performance and for updates on unit repairs. The remaining pool contains eight partial interest only and one full term interest only loans totalling 13.8%. Maturity dates are concentrated in 2021 and 2022.

The largest loan in the pool is the Brooklyn Gold loan (8.5%), secured by a 372-unit, mid-rise apartment building in Brooklyn, NY. Performance at the property has remained stable with occupancy at 97% as of December 2015. The servicer-reported net operating income (NOI) debt service coverage ratio (DSCR) increased to 1.73x as of year-end (YE) 2015 from 1.65x as of YE 2014.

The next largest loan in the pool is the Cork Factory loan (4.2%), secured by 297-unit apartment complex in Pittsburgh, PA. The buildings were originally built in 1901 and served as a cork factory until their conversion into residential units in 2006. Occupancy at the property increased to 96% as of December 2015 from 93% at YE 2014. Year-to-date NOI DSCR was 1.52x as of September 2015.

The third largest loan (3%) in the pool is secured by a 416-unit, garden-style apartment complex in Aurora, IL. The property, Aspen Place, has continued to exhibit stable performance since issuance. Year-to-date NOI DSCR was 2.07x as of September 2015. According to the April 2016 rent roll, the property was 97% occupied.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain Stable. 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.

DUE DILIGENCE USAGE

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

Fitch affirms the following classes:

FREMF 2012-K19

--$125.4 million class A-1 at 'AAAsf'; Outlook Stable;

--$885 million class A-2 at 'AAAsf'; Outlook Stable;

--$66.8 million class B at 'Asf'; Outlook Stable;

--$31.8 million class C at 'BBB+sf'; Outlook Stable;

--$1 billion* class X1 at 'AAAsf'; Outlook Stable;

--$1 billion* class X2-A at 'AAAsf'; Outlook Stable.

Fitch does not rate the D and the interest-only X2-B and X-3 certificates.

Freddie Mac Structured Pass-Through Certificates, Series K-019

--$125.4 million class A-1 at 'AAAsf'; Outlook Stable;

--$885 million class A-2 at 'AAAsf'; Outlook Stable;

--$1 billion* class X-1 at 'AAAsf'; Outlook Stable.

*Notional and interest-only.

Fitch does not rate the class X-3 certificates.

There was a variance from criteria related to class B. The surveillance criteria indicated that an upgrade was possible. However, Fitch determined that an upgrade was not warranted at this time as there have been no material changes to the performance of the pool since issuance and minimal increase in credit enhancement.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

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 2012-K19 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-019 -- Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=691656

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004691

Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004691

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

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Contacts

Fitch Ratings
Primary Analyst:
Zachary Johnson, +1-646-582-4815
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson:
Britt Johnson, +1-312-606-2341
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst:
Zachary Johnson, +1-646-582-4815
Associate Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson:
Britt Johnson, +1-312-606-2341
Senior Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com