Fitch Affirms FREMF 2013-K32 and Freddie Mac Pass-Through Certificates, Series K-032

NEW YORK--()--Fitch Ratings has affirmed six classes of FREMF 2013-K32 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-032. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations reflect the stable performance of the underlying collateral pool. As of the June 2016 distribution date, the pool has no delinquent or specially serviced loans. The pool's aggregate principal balance has been reduced by 2.98% to $1.47 billion from $1.51 billion at issuance. One loan (2% of the pool) has defeased. Five loans (3.9%) are on the servicer's watchlist; however, only one is considered a Fitch Loan of Concern (0.5%); the other four loans are on the watchlist due to deferred maintenance. All of the loans mature in 2023 and later and only 3.1% have full interest-only terms; partial IO terms for all except one loan (2.7%) have expired.

The Fitch Loan of Concern (Columbia Towers) was previously in special servicing and is the only loan in the pool to transfer to special servicing since issuance. The loan is secured by a 65-unit, 5-story apartment building located in Bridgeport, CT (between Stamford and New Haven, CT). The $6.9 million loan transferred to special servicing in January 2014 due to payment default. The loan transferred back to the master servicer in April 2015 after the borrower paid all past amounts due. The loan remains current. As of year-end (YE) 2015, occupancy and NOI DSCR were 95% and 1.01x, respectively.

The largest loan in the pool (6.7%) is secured by Tesoro at Crescent Village, a 380-unit garden-style apartment complex located in San Jose, CA. The property was built in 2012 and is the first of five phases to be completed within the larger Crescent Village development. Amenities are shared among all five phases and include the following: Five saltwater pools and spas, a fitness center with a spin, yoga and aerobics room, a five-acre park, a clubhouse, internet cafe, a movie theater with seating for 23, a basketball court and two tennis courts. The subject began leasing in April 2012, stabilized in February 2013, and is performing with occupancy at 89% and NOI DSCR at 1.41x as of YE 2015.

The second largest loan in the pool (5.5%) is secured by Muirwood Apartments, a 1,272-unit garden style apartment complex located in Farmington Hills, MI (Detroit MSA). The property was built in five phases between 1976 and 1986 with a total of 86 two- and three-story apartment buildings. Amenities include: 24-hour attended gated entry, a clubhouse, an indoor resistance lap pool, sauna, hot tub, fitness center, three tennis courts, a sand volleyball court, picnic area, fitness trail, and an outdoor Olympic-size pool. The subject is performing with occupancy at 92% and NOI DSCR at 2.29x as of YE 2015.

RATING SENSITIVITIES

The Stable Outlooks reflect stable pool performance since issuance. To date, the majority of partial interest-only loan terms have expired and the pace of amortization should increase, which should improve credit enhancement if pool performance remains stable. However, positive or negative rating actions are not expected until a material economic or asset level event changes the transaction's overall portfolio-level metrics. Additional information on rating sensitivity is available in the 'FREMF 2013-K32 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-032' (Nov. 18, 2013) new issue report, 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 as indicated:

FREMF 2013-K32 Multifamily Mortgage Pass-Through Certificates

--$210.5 million class A-1 at 'AAAsf'; Outlook Stable;

--$1 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.2 billion* class X1 at 'AAAsf'; Outlook Stable;

--$1.2 billion* class X2-A at 'AAAsf'; Outlook Stable;

--$90.8 million class B at 'A-sf'; Outlook Stable;

--$37.8 million class C at 'BBBsf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-032

--$210.5 million class A-1 at 'AAAsf'; Outlook Stable;

--$1 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.2 billion* class X1 at 'AAAsf'; Outlook Stable.

*Notional amount and interest only.

Of the FREMF 2013-K32 multifamily mortgage pass-through certificates, Fitch does not rate the interest-only class X2-B, the interest-only class X3 or class D. In addition, of the Freddie Mac structured pass-through certificates, series 2013-K032, Fitch does not rate interest-only class X3.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 18 Jul 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884963

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=882401

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130

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-K32 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-032 - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720776

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1009288

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009288

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Martin Nunnally
Associate Director
+1-212-908-0871
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, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Martin Nunnally
Associate Director
+1-212-908-0871
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, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com