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

NEW YORK--()--Fitch Ratings has affirmed five 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 1.4% to $1.22 billion from $1.24 billion at issuance. Fitch has designated one Fitch Loan of Concern (0.1%). 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, which is in the northeastern portion of Columbus, OH. The collateral, which is part of a larger development, consists of 70 two- and three-story apartment buildings constructed in four phases from 2005 - 2013. As of year-end (YE) 2015, the servicer reported occupancy and Debt Service Coverage Ratio (DSCR) were 91.0% and 1.52x, respectively.

The second largest loan (4.7% 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 YE 2015, the servicer reported occupancy and DSCR were 97.4% and 2.21x, 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.

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

--$152,722,745 class A-1 at 'AAAsf'; Outlook Stable;

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

--$1,040,278,745* 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

--$152,722,745 class A-1 at 'AAAsf'; Outlook Stable;

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

--$1,040,278,745* class X1 at 'AAAsf'; Outlook Stable.

*Notional amount and interest-only. Fitch does not rate 2014-K38 classes D and X-3.

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

Related Research

FREMF 2014-K38 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-038 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750339

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004702

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004702

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Tiffany Pierce
Associate Director
+1-212-908-9107
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Tiffany Pierce
Associate Director
+1-212-908-9107
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Britt Johnson
Senior Director
+1-312-606-2341
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com