Fitch Affirms FREMF 2012-K18

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed five classes of Freddie Mac 2012-K18 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, K-018. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations of Freddie Mac 2012-K18 are based on the stable performance of the underlying collateral. As of the February 2015 distribution date, the pool's aggregate principal balance has been reduced by 2.95% to $1.18 billion from $1.21 billion at issuance. Fitch has designated two Fitch Loans of Concern (2%). There are no specially serviced loans, and four loans (3.7%) are fully defeased as of the February 2015 remittance date.

The affirmations of the Freddie Mac K-018 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 2012-K18.

The largest Fitch Loan of Concern is secured by a 408-unit student housing property located in Akron, OH (1.2% of the pool). The property, which was built in 1969 and renovated in 2011, is adjacent to the University of Akron. As per the property's financials, the trailing twelve month (TTM) September 2014 debt service coverage ratio (DSCR) dropped to 1.10x, compared to 1.16x as of year-end (YE) December 2013 and 1.54x as of YE December 2012. The drivers for the drop in DSCR include an increase in expenses and a decline in average rental rates from $655.29 per unit as of Dec. 31, 2013 to $539.97 per unit as of Nov. 18, 2014. However, the servicer-reported occupancy has increased to 97% as of September 2014, compared to 86% at year-end 2013 and 83% at year-end 2012.

The largest loan of the pool (7.2%) is secured by Central Astoria Apartments, a 100% rent stabilized, 894-unit garden-style apartment complex located in Astoria, New York. The property is located close to several major highways, within 10 minutes of LaGuardia Airport, and less than a 30-minute subway ride into Manhattan. As per the property's rent roll, the occupancy was 99% as of December 2014. The YE December 2014 DSCR reported at 2.41x, compared to 2.36x for both YE 2013 and YE 2012.

The second largest loan (5.6%) is secured by Aldingbrooke Terrace-Townhomes, a 667-unit garden-style and townhome complex located in West Bloomfield, MI. The property was improved in 2010 with 78 two- and three-story apartment buildings and a single-story clubhouse. The property lacks competition in the submarket due to the large unit sizes compared to its competitors. The December 2014 rent roll reported in line with December 2013 at 90% occupancy, and slightly above December 2012 at 85%. The year to date (YTD) September 2014 DSCR reported at 1.73x, compared to 1.79x for both YE 2013 and YE 2012.

RATING 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-K18 Freddie Mac 2012-K18' (May 31, 2012), available at www.fitchratings.com

Fitch affirms the following classes as indicated:

FREMF 2012-K18 Multifamily Mortgage Pass-Through Certificates--$124 million class A-1 at 'AAAsf'; Outlook Stable;--$887.5 million class A-2 at 'AAAsf'; Outlook Stable;--$74.3 million class B at 'A-sf'; Outlook Stable;--$1 billion class* X1 at 'AAAsf'; Outlook Stable;--$1 billion* class X2-A at 'AAAsf'; Outlook Stable.

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

Freddie Mac Structured Pass-Through Certificates Series K-018--$124 million class A-1 at 'AAAsf'; Outlook Stable;--$887.5 million class A-2 at 'AAAsf'; Outlook Stable;--$1 billion class X1 at 'AAAsf'; Outlook Stable.

*Notional amount and interest only.

Fitch does not rate the X3 class certificate

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 report:-- 'FREMF 2012-K18 Multifamily Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-018 -- Appendix' (May 31, 2012).

Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 10, 2014 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at 'www.fitchratings.com' under the following headers:

Structured Finance >> CMBS >> Criteria Reports

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

Applicable Criteria and Related Research:--'Global Structured Finance Rating Criteria' (March 2015);--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 10, 2014).

Applicable Criteria and Related Research:Global Structured Finance Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=812608

Additional DisclosureSolicitation Statushttp://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982365ALL 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.

Fitch Ratings
Primary Analyst
Benson Thomas
Director
+1-212-908-0645
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, New York, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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