DBRS Confirms Five Classes of FREMF 2011-K15 Mortgage Trust, Series 2011-K15

DBRS has today confirmed five classes of the Multifamily Mortgage Pass-Through Certificates Series 2011-K15 issued by FREMF 2011-K15 Mortgage Trust, Series 2011-K15 as follows:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class B at A (high) (sf)
-- Class X1 at AAA (sf)
-- Class X2 at AAA (sf)

All trends are Stable.

The pool comprises 91 fixed-rate loans secured by 91 multifamily properties located across 30 states. All loans within this transaction are structured with ten-year loan terms. One loan, representing 2.22% of the current pool balance, is interest-only for the full loan term and 28 loans, representing 52.89% of the current pool balance, have partial interest-only during the loan term. The transaction closed in November 2011 and, since issuance, the outstanding principal balance has been reduced by 0.50% through amortization. Updated year-end 2011 financials were available for 85 of the 91 loans, representing 95.83% of the outstanding balance. The weighted-average debt service coverage ratio (DSCR) for those loans reporting updated financials was 1.40 times (x); the weighted-average DBRS term DSCR was 1.35x for the pool at the time of issuance.

As of the September 2012 remittance report, there was one loan on the servicer’s watchlist, representing 1.32% of the current pool balance. Prospectus ID #25 (Western Terrace I & II) is secured by a 404-unit garden-style apartment complex in Colorado Springs, Colorado. The loan was added to the watchlist in September 2012 for the low Q2 2012 DSCR, which was reported to be 0.97x, down the from the issuer’s underwritten DSCR of 1.32x. The annualized Q2 2012 net cash flow figure is reflective of a 26.52% decline from the issuer’s underwritten figure. The servicer attributed the decline in cash flow to a high tenant turnover in the spring of 2012, causing costs associated with re-letting the property to increase. The borrower has reportedly implemented a plan to stabilize expenses over the near term and have increased occupancy from 87.62% at YE2011 to 95.54% in June 2012.

Performance of the portfolio is viewed to be in-line with DBRS expectations at issuance, thereby supporting the ratings confirmations. For further information on the DBRS viewpoint for this pool, including commentary on the largest loans and additional detail on the loan on the servicer’s watchlist, please see the October 2012 Monthly Surveillance Report for this transaction, which will be published shortly on the DBRS website at www.dbrs.com.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (May 2011), which can be found on our website under Methodologies.

This rating did not include issuer participation and is based solely on publicly available information.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.