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Fitch Affirms Freddie Mac 2011-K15 and Freddie Mac Structured Pass-Through Certificates K-015

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has affirmed all four classes of Freddie Mac 2011-K15 multifamily mortgage pass-through certificates and the three classes of Freddie Mac structured pass-through certificates, K-015. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations of the Freddie Mac 2011-K15 are based on the stable performance of the underlying collateral pool. As of the August 2013 remittance, the pool had no delinquent or specially serviced loans. The pool's aggregate principal balance has been paid down by 2.2% to $1.14 billion from $1.165 billion at issuance. 82 of 91 loans within the transaction (90% of the pool) reported full year 2013 financials. Based on the full year financial statements, the pool's overall net operating income (NOI) improved 5.7% since last year's reported financials and 11.9% since issuance. Fitch has not designated any performing loans as Fitch Loans of Concern. One loan (1.9%) is on the master servicer's watchlist due to deferred maintenance issues associated with exterior walkways and the apartment grounds.

The affirmations of the Freddie Mac K-015 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes for FREMF 2011-K15.

The largest loan of the pool (8.92%) is secured by West End 25, a 283-unit mid-rise apartment building located in Washington, D.C. The building incorporates a number of amenities which include 24-hour attended front desk, business center, lounge area, fitness center, and garage parking. The apartments feature floor to ceiling windows, updated stainless steel appliances, and balconies. The building is situated in a Washington D.C. neighborhood that provides high-end retail, restaurants, employment centers, and access to public transportation. The sponsor of the loan is a Vornado Realty Trust which owns over 2,400 residential units and 74 office properties in the Washington D.C. metro area. The property has experienced a consistent occupancy rate of 95% during the life of the transaction. The asset continues to exhibit strong rental rate growth with net operating income for the subject 2.4% higher than the servicer provided full year 2012 metric and is 16.9% higher than at issuance.

The second largest loan (3.95%) is secured by La Terraza Apartments, a 402-unit garden style apartment complex located in San Diego, CA. The subject is located on 27 acres and is in close proximity to employment centers, retail shopping, and a north-south interstate thoroughfare. The subject underwent significant renovations 2008 through 2011 for the apartment units, exterior building improvements, pool, and fitness center. Management for the complex continues to drive NOI growth through operating expense control. The 2012 trend of the subject generating net operating income growth through expense controls continues with the servicer provided financial statements listing an 11% decrease in expenses while gross income and occupancy are flat compared to 2012 metrics.

The third largest loan (3.58%) is secured by a 512-unit 24 building apartment community located in Mountlake Terrace, WA, approximately 14 miles from Seattle. The subject was built in 1987 and has been undergoing an extensive capital improvement plan since the sponsor acquired the property in 2011. The renovation includes upgrading the apartment units, repainting the exteriors, and expanding the fitness center. The subject experienced a 12.4% increase in NOI during 2013 driven by the property increasing rental rates and increasing gross rental receipts 9.4% over year-end 2012. The community amenities consist of an outdoor swimming pool, hiking trail, basketball court, volleyball court, and fitness center.

RATINGS 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 overall portfolio-level metrics. Additional information on rating sensitivity is available in the report 'FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K015' (Dec 22, 2011), available at www.fitchratings.com.

Fitch has affirmed the following classes:

FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates

--$117.9 million class A-1 at 'AAAsf'; Outlook Stable;

--$866.3 million class A-2 at 'AAAsf'; Outlook Stable;

--$984.2 million class X1 at 'AAAsf'; Outlook Stable;

--$67 million class B at 'A-sf'; Outlook Stable.

Fitch does not rate classes C, interest-only class X2, and interest-only class X3.

Freddie Mac Structured Pass-Through Certificates, Series K-015

--$117.9 million class A-1 at 'AAAsf'; Outlook Stable;

--$866.3 million class A-2 at 'AAAsf'; Outlook Stable;

--$984.2 million class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate interest-only class X3.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following reports:

--'FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-015' (Dec. 22, 2011);

--'FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-015 -- Appendix' (Dec. 22, 2011).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-015

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=656973

FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-015 --Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=663754

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=858674

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Jay Bullie
Associate Director
+1-312-368-2079
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Karen Trebach
Senior Director
+1-212-908-0215
or
Media Relations
Alyssa Castelli, New York, +1-212-908-0540
alyssa.castelli@fitchratings.com