DBRS Confirms Class B of FREMF 2011-K11 Mortgage Trust, Series 2011-K11

DBRS has today confirmed Class B of the Multifamily Mortgage Pass-Through Certificates, Series 2011-K11, issued by FREMF 2011-K11 Mortgage Trust, Series 2011-K11 (the Trust), at A (high) (sf) with a Stable trend.

This transaction closed in March 2011 and comprises 76 loans secured by 78 multifamily and student housing properties located across 24 states. Approximately 85% of the pool is located in urban and suburban markets, with approximately 9% of the pool situated in tertiary locations and approximately 6% located in markets considered rural. Approximately 23% of the pool is secured by properties located in California, with the next-largest concentration in New York, where approximately 11% of the collateral by allocated pool balance is located.

The overall performance of the pool has been strong since issuance, with a weighted-average DSCR of 1.57x (as based on the most recent FYE reporting for each loan) and a weighted-average debt yield of 9.9%. These figures compare well with the figures at issuance of 1.40x and 8.8%, respectively. The weighted-average NCF growth from the DBRS UW figure for the pool is strong, at 14.3%. Approximately 40.3% of the pool was reporting FYE 2012 NCF figures as of the April 2013 remittance report, with the remainder of the pool reporting FYE 2011 NCF figures and at least partial NCF figures for 2012.

The Top 15 loans have performed particularly well since issuance, with a weighted-average DSCR and debt yield of 1.49x and 9.28%, respectively, as of the most recent FYE reporting for each loan. The largest loan in the pool, Prospectus ID #1, Truffles Tribeca (8.54% of the pool), had a Q3 2012 DSCR of 1.83x and a debt yield of 6.8%, as compared with 1.66x at YE2011 with a debt yield of 6.2%. The second-largest loan, Prospectus ID #2, Snyder Apartment Portfolio (5.05% of the pool), had a YE2011 DSCR of 2.05x, with a debt yield of 9.0%. These figures compare favorably with the DBRS UW DSCR and debt yield at issuance of 1.56x and 8.4%, respectively.

As of the April 2013 remittance report, there were three loans on the servicer’s watchlist, representing 12.7% of the pool. The largest loan on the watchlist is Prospectus ID #1, Truffles Tribeca, which is secured by a property located in Manhattan’s Tribeca neighborhood and being monitored due to property damage sustained as a result of Hurricane Sandy in October 2012. The servicer reports that the borrower has processed an insurance claim for the damage, with work underway to remediate the issues at the property. The work is scheduled for completion by the end of the year. DBRS does not expect these issues will significantly impact the property, a luxury high-rise apartment complex constructed in 2009 in a very desirable location, with strong occupancy and cash flow growth since issuance.

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 largest loans in the pool and the loans on the servicer’s watchlist. The April 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.

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

The applicable methodologies are CMBS Rating Methodology and CMBS North American CMBS Surveillance Methodology, which can be found on our website under Methodologies.