DBRS Correction: DBRS Confirms All Classes of FREMF 2012-K17 Mortgage Trust, Series 2012-K17

DBRS has issued a correction for the press release confirming the ratings of FREMF 2012-K17 Mortgage Trust, which were listed incorrectly in the text. The corrected press release is as follows:

DBRS has today confirmed all classes of FREMF 2012-K17 Mortgage Trust as follows:

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

The trends on all classes are Stable.

The pool consists of 72 fixed-rate loans secured by 76 multifamily properties. The transaction has experienced 0.7% of collateral reduction since issuance as a result of amortization, with all of the original 72 loans remaining in the pool. The pool benefits from strong origination practices and strong sponsorship, with many borrowers being repeat clients of Freddie Mac. There are currently no loans on the watchlist or in special servicing. As of the February 2013 remittance, loans representing approximately 76% of the pool balance are reporting partial or full-year 2012 financials. The weighted-average debt service coverage ratio (DSCR) and weighted-average debt yield for these loans are 1.73x and 9.8%, respectively. In comparison, the weighted-average DSCR and the weighted-average debt yield at issuance were 1.40x and 8.4%, respectively.

The pool is concentrated by loan size, with just over 15% of the current pool balance represented in the largest loan, Park Newport (Prospectus ID#1). By comparison, the next largest loan in the pool represents 5.2% of the current pool balance. Park Newport is a $190 million interest-only loan secured by a garden-style apartment complex spread across 52.3 acres in Newport Beach, California. As of September 2012, the annualized DSCR was reported to be 2.32x, up from a DBRS UW DSCR of 1.96x. The corresponding Q3 2012 occupancy rate was 95%, up from 92% at issuance. Reis reported in Q4 2012 that the average vacancy for properties of similar age in the subject’s submarket was 3.4%, with an average rental rate for the overall submarket of $1,715 per unit. The property is borrower-developed and managed, and is located in a highly desirable area along Upper Newport Harbor. At issuance, more than $13 million (approximately $10,000/unit) had been injected into the property for upgrades since 2007.

Apart from the concentration risk in the largest loan and property type, the pool is relatively diverse. Twelve states are represented in the pool’s largest fifteen loans; combined, these loans represent 53.0% of the current pool balance, with a weighted-average DSCR and debt yield of 1.83x and 9.8%, respectively, as of the most recent 2012 reporting. The weighted-average occupancy rate for these loans is 95.1%.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the remaining loans in the pool. The February 2013 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@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 (November 2012), which can be found on our website under Methodologies.

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