Fitch Affirms FREMF 2011-K16 & Freddie Mac Structured Pass-Through Certificates Series K-016

NEW YORK--()--Fitch Ratings has affirmed five classes of FREMF 2011-K16 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates series K-016. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations are the result of continued stable pool performance. As of the May 2015 distribution date, the pool's aggregate principal balance has been reduced by 4.3% to $1.12 billion from $1.17 billion at issuance. Three loans (5%) are on the servicer's watch list, one of which (3.5%) has been designated as a Fitch Loan of Concern. There have been no specially serviced loans since issuance. Six loans (5.3%) are defeased.

The affirmations of the Freddie Mac SPC K-016 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of the corresponding classes of FREMF 2011-K16.

The Fitch Loan of Concern (3.5% of the pool) is secured by Promontory Pointe, a 596-unit, garden-style apartment complex located in San Antonio, TX. The property is near the University of Texas Health Science Center and St. Mary's University Law School, and has typically had a high graduate student concentration. Since 2012, the property's performance has declined year-over-year. The debt service coverage ratio (DSCR) declined 24% from 1.57x at year-end (YE) 2014 to 0.86x at YE 2015 and occupancy declined from 93% to 82%. The decrease in performance is due to both a decline in occupancy, as well as the loan's interest only term expiring, with principal and interest now due. Fitch will continue to monitor the property's performance.

The largest loan in the pool (9.4%) is secured by The Corner Apartments, a 196-unit high-rise luxury apartment building located in the Upper West Side neighborhood of Manhattan. The property, built in 2010, features amenities including a concierge, full-time doorman, roof deck with BBQ grills and bar area, fitness center, tenant lounge with adjacent patio area and an event room. The servicer-reported occupancy as of December 2015 was 92% and September 2015 DSCR was 1.92x.

The second largest loan in the pool (4.1%), Meridian at Braddock Station, is secured by a 480-unit, two building mid-rise apartment complex located six-miles south of Washington, D.C. The property contains a 12 and 16-story building that include a business center, rooftop pool and sundeck, two fitness centers and concierge services. The property's performance has increased year-over-year since issuance. As of YE 2015, DSCR increased to 2.23x from 2.08x at YE 2014 and occupancy increased to 93% from 91%.

RATING SENSITIVITIES

The Rating Outlooks on classes A-1 through B remain Stable due to stable performance of the underlying collateral. Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's portfolio-level metrics. Additional information on rating sensitivity is available in the report 'FREMF 2011-K16 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-016' (Dec. 6, 2011), 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 classes:

FREMF 2011-K16 Multifamily Mortgage Pass-Through Certificates

--$83.9 million class A-1 at 'AAAsf'; Outlook Stable;

--$880.1 million class A-2 at 'AAAsf'; Outlook Stable;

--$68.8 million class B at 'A-sf'; Outlook Stable;

--$964 million* class X1 at 'AAAsf'; Outlook Stable;

--$964 million* class X2-A at 'AAAsf'; Outlook Stable.

Fitch does not rate classes C, X2-B and X3.

Freddie Mac Structured Pass-Through Certificates Series K-016

--$83.9 million class A-1 at 'AAAsf'; Outlook Stable;

--$880.1 million class A-2 at 'AAAsf'; Outlook Stable;

--$964 million* class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate the class X3 certificates.

*Notional amount and interest-only.

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

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 2011-K16 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-016 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=677415

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1005419

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1005419

Endorsement Policy

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

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Contacts

Fitch Ratings
Primary Analyst
Catherine Barbieri
Associate Director
+1-212-908-0638
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Catherine Barbieri
Associate Director
+1-212-908-0638
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com