Fitch Ratings has affirmed all five classes of FREMF 2012-K705
multifamily mortgage pass-through certificates and three classes of
Freddie Mac structured pass-through certificates, series K-705. A
detailed list of rating actions follows at the end of this
release.
KEY RATING DRIVERS
The affirmations are based on the stable performance of the
underlying collateral pool. As of the December 2014 remittance, the
pool has had no delinquent or specially serviced loans since
issuance. Fitch has designated the one watchlist loan (2%) as a
Fitch loan of concern due to a decline in occupancy since
issuance.
The pool's aggregate principal balance has been paid down by
approximately 2% since issuance. Sixty-four (91.4% of the pool) of
the 70 pool loans reported year-end (YE) 2013 financials or rolling
12-month financials and the pool's overall net operating income
(NOI) has been stable with a 4.2% NOI increase over the issuance
reported NOI.
The Fitch Loan of Concern (2.13%) is secured by a 384-unit
apartment complex, The Gardens at Anthony House, located in
Greensboro, NC, three miles southwest of the central business
district. The owner invested over $15 million dollars into the
apartment complex's second phase (Phase 2) which added an
additional 216 units and was finished during the late 2013/early
2014. Phase 2 is not collateral for the loan. Occupancy at the
collateral property as June 2014 had fallen to 72% as the sponsor
worked to lease-up the additional units and as tenants relocated to
the newer units in Phase 2. Prior to the completion of Phase 2, the
collateral complex had a historical occupancy in excess of 95%.
Fitch will continue to monitor occupancy at the subject as Phase 2
stabilizes.
The largest loan of the pool (9.83%) is secured by The Enclave,
a 1,119-unit three-building apartment complex located in Silver
Spring, MD. The prior owner instituted a major interior and
exterior capital plan from 2003 through 2009. The apartment complex
amenities include a swimming pool, tennis courts, a volleyball
court, and three concierge desks. The complex is situated along
Columbia Pike and has access to three metro stations within a
five-mile radius of its location.
The second largest loan (4.65%) is secured by Crosswinds at
Rolling Road, a 803-unit town-home-style apartment complex situated
eight miles from Baltimore's CBD. The subject is located in the
Woodlawn submarket of Baltimore and benefits from the diversified
employment base of defense, life science, financial, and business
service companies. The property recently underwent significant
capital improvements that included replacement of all roofs, new
paint on exterior shutters and doors, along with re-striping of the
parking lot.
RATINGS SENSITIVITIES
All classes maintain Stable Outlooks. 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. Additional information on rating sensitivity is available
in the report 'FREMF 2012-K705 Multifamily Mortgage Pass-Through
Certificates and Freddie Mac Structured Pass-Through Certificates,
Series K-705' (Feb. 29, 2012), available at
www.fitchratings.com.
Fitch has affirmed the following classes as indicated:
FREMF 2012-K705 Multifamily Mortgage Pass-Through
Certificates
--$69.8 million class A-1 at 'AAAsf'; Outlook Stable;
--$936.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$1 billion class X1 at 'AAAsf'; Outlook Stable;
--68.8 million class B at 'Asf'; Outlook Stable;
--30.6 million class C at 'BBB+sf'; Outlook Stable.
Freddie Mac Structured Pass-Through Certificates series
K-705
--$91.1 million class A-1 at 'AAAsf'; Outlook Stable;
--$936.3 million class A-2 at 'AAAsf'; Outlook Stable;
--$1 billion class X1 at 'AAAsf'; Outlook Stable;
*Notional amount and interest only.
Of FREMF 2012-K705, Fitch does not rate the 1.2 billion
interest-only class X2, the $191 million interest-only class X3 or
the $91.7 million class D. Of the Freddie Mac Structured
Pass-Through Certificates, Series K-705, Fitch does not rate the
$191 million interest-only X3.
Additional information is available at
'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 20,
2014);
--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC
Criteria' (Dec. 10, 2014).
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 2012-K705 Multifamily Mortgage Pass-Through
Certificates and Freddie Mac Structured Pass-Through Certificates,
Series K-705' (Feb. 29 2012).
--'FREMF 2012-K705 Multifamily Mortgage Pass-Through
Certificates and Freddie Mac Structured Pass-Through Certificates,
Series K-705 - Appendix' (Feb. 29 2012).
Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria - Effective from 20
May 2014 to 4 August 2014
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821
U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC
Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608
FREMF 2012-K705 Multifamily Mortgage Pass-Through Certificates
and Freddie Mac Structured Pass-Through Certificates, Series
K-705
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=671552
FREMF 2012-K705 Multifamily Mortgage Pass-Through Certificates
and Freddie Mac Structured Pass-Through Certificates, Series K-705
- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672272
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=958136
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY
FOLLOWING THIS LINK:
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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.
Fitch RatingsPrimary AnalystJay BullieAssociate
Director+1-312-368-2079Fitch Rating, Inc.70 W. Madison
StreetChicago, IL 60602orCommittee ChairpersonMary MacNeillManaging
Director+1-212-908-0785orMedia Relations:Sandro Scenga,
+1-212-908-0278sandro.scenga@fitchratings.com