Fitch Affirms Freddie Mac 2014-K41 and Freddie Mac Structured Pass-Through Certificates K-041

NEW YORK--()--Fitch Ratings has affirmed six classes of Freddie Mac 2014-K41 multifamily mortgage pass-through certificates along with three classes of Freddie Mac structured pass-through certificates, K-041. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations of Freddie Mac 2014-K41 are based on the stable performance of the underlying collateral pool. The pool's aggregate principal balance has been paid down by 0.3% to $1.376 billion from $1.380 billion at issuance. Fitch has not designated any loans as Fitch Loans of Concern. No loans are on the master servicer's watchlist or have been transferred to the special servicer since issuance. The 96 loans' final maturity dates are in 2023 (0.9%) and 2024 (99.1%).

The affirmations of the Freddie Mac K-041 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 2014-K41.

The largest loan of the pool (5.5%) is secured by The Residences at Stevens Pond, a 326-unit townhome and garden-style apartment community located in Saugus, MA approximately 11 miles north of the Boston CBD. The subject property comprises 25 three-story apartment buildings constructed in 2003. The community amenities for residents include a clubhouse with lounge area and theater, swimming pool, BBQ and picnic area, playground, fitness center and indoor basketball court. The property was 95.7% occupied as of September 2014 and 96.3% as of June 2015. The servicer reported second-quarter 2015 (2Q15) debt service coverage ratio (DSCR) was 1.84x, compared to 1.27x at underwriting.

The second largest loan of the pool (3.4%) is secured by Waterfield Court, a 482-unit garden-style apartment community located in Aurora, CO approximately 12 miles southeast of the Denver CBD. Waterfield Court consists of 32 two- and three-story apartment buildings that were constructed in two phases: 1988 and 1996. Buckley AFB is four miles from the property and at issuance the property had a military concentration of 10%-15%. Property amenities include a clubhouse with lounge area, two swimming pools, indoor spa, basketball court, picnic area, playground, dog park, laundry and covered parking. The property was 97.1% occupied as of July 2014 and 96.9% as of June 2015. The servicer-reported 2Q15 DSCR was 2.28x.

The third largest loan of the pool (3.3%) is secured by Glenmuir, a 321-unit garden-style apartment community located in Naperville, IL approximately 30 miles west of the Chicago CBD. Glenmuir consists of 24 two-story apartment buildings that were constructed in 1999 and includes amenities such a clubhouse, swimming pool and fitness center. The property was 96.3% occupied as of Aug. 2014 and 94% occupied as of June 2015. The servicer-reported 2Q5 DSCR was 1.73x.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain 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 'FREMF 2014-K41 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-041' (Dec. 2, 2014) 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 affirms the following classes:

FREMF 2014-K41 Multifamily Mortgage Pass-Through Certificates:

--$171.9 million class A-1 at 'AAAsf'; Outlook Stable;

--$962.4 million class A-2 at 'AAAsf'; Outlook Stable;

--$103.5 million class B at 'BBB+sf'; Outlook Stable;

--$34.5 million class C at 'BBB-sf'; Outlook Stable;

--$1.139 billion class X1 at 'AAAsf'; Outlook Stable;

--$1.139 billion class X2-A at 'AAAsf'; Outlook Stable.

Fitch does not rate class D, interest-only class X2-B, and interest-only class X3.

Freddie Mac Structured Pass-Through Certificates, Series K-041:

--$171.9 million class A-1 at 'AAAsf'; Outlook Stable;

--$962.4 million class A-2 at 'AAAsf'; Outlook Stable;

--$1.139 billion class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate interest-only class X3.

Additional information is available at www.fitchratings.com.

Applicable Criteria

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-K41 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-041 - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=828409

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=995304

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=995304

Endorsement Policy

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

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
Darren Liss, +1-212-908-0753
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Chris Bushart, +1-212-908-0606
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Darren Liss, +1-212-908-0753
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Chris Bushart, +1-212-908-0606
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com