Fitch Affirms FREMF 2013-K34 and Freddie Mac Series K-034

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed five classes of FREMF 2013-K34 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-034. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

The affirmations of FREMF 2013-K34 are based on the stable performance of the underlying collateral. No loans have paid off since issuance. As of the August 2016 distribution date, the pool's aggregate principal balance has been reduced by 1.4% to $1.53 billion from $1.55 billion at issuance. Approximately 88% of the pool is either partial-term or full-term interest only. Many partial interest only periods have recently ended. Fitch has not designated any Fitch Loans of Concern, and no loans are in special servicing. Two loans (0.6%) are defeased.

The affirmations of the Freddie Mac Series K-034 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes of FREMF 2013-K34.

The largest loan in the pool (10.7%) is a 50% pari passu A-note secured by The Gateway, a 1,254-unit high-rise and town home apartment complex located in San Francisco, CA. The complex was constructed in 1965 and underwent $11.4 million in renovations in 2011. The property resides in the financial district, two blocks north of the Embarcadero Center. Many units have views of the San Francisco Bay. As of the December 2015 rent roll, occupancy remained high at 97.3%. The year-end 2015 servicer reported debt service coverage ratio (DSCR) was 3.16x. The loan is interest only for the entire loan term.

The next largest loan in the pool (5.6%) is Park Sierra, a 776-unit garden-style apartment complex located in Santa Clarita, CA approximately 25 miles north of the Los Angeles central business district. The property was built by the borrower between 1987 and 1989 with some renovations in 2012. Rent control restrictions expired in September 2015. As of the December 2015 rent roll, the property was 97.2% occupied. The year-end 2015 servicer reported DSCR was 2.38x. The loan recently exited its interest only period and is now amortizing.

RATING SENSITIVITIES

The Rating Outlooks remains Stable. No loans are scheduled to mature until 2023. Further upgrades may occur with improved pool performance and significant paydown or increased defeasance. Downgrades to the classes are possible should overall pool performance decline.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

FREMF 2013-K34 Multifamily Mortgage Pass-Through Certificates

--$164.4 million class A-1 at 'AAAsf'; Outlook Stable;

--$1.1 billion class A-2 at 'AAAsf'; Outlook Stable;

--$96.7 million class B at 'A-sf'; Outlook Stable;

--$38.7 million class C at 'BBBsf'; Outlook Stable;

--$1.3 billion* class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate the class D or the X3 certificates.

Freddie Mac Structured Pass-Through Certificates, Series K-034

--$164.4 million class A-1 at 'AAAsf'; Outlook Stable;

--$1.1 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.3 billion* class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate the class X3 certificates.

*Notional balance.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

U.S. and Canadian Fixed-Rate Multiborrower CMBS Surveillance and U.S. Re-REMIC Criteria (pub. 13 Nov 2015)

https://www.fitchratings.com/site/re/873395

Related Research

FREMF 2013-K34 MultiFamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-034: Appendix

https://www.fitchratings.com/site/re/722835

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1011348

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1011348

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160907006832/en/

Fitch Ratings
Primary Analyst
Stacey McGovern
Director
+1-212-908-0722
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
[email protected]

Source: Fitch Ratings

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