DBRS Confirms All Classes of FREMF 2013-K29 Mortgage Trust, Series 2013-K29

DBRS has today confirmed all classes of FREMF 2013-K29 Mortgage Trust, Series 2013-K29 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 (high) (sf)
--Class C at BBB (high) (sf)

The trends on all classes are Stable.

The rating confirmations reflect the overall stability of the pool’s performance since issuance in May 2013. The transaction consists of 87 fixed-rate loans, secured by 87 multifamily properties. The pool has experienced 0.33% of collateral reduction since issuance as a result of scheduled amortization. Loans secured by properties located within suburban markets represent 73.5% of the current pool balance, and loans secured by properties located within urban markets represent 20.1% of the current pool balance. The pool benefits from strong origination practices and strong sponsorship, with many borrowers being repeat clients of Freddie Mac.

The pool’s largest loan by a significant margin is Crystal Towers (Prospectus ID#1, 14.73% of the current pool balance). This loan is secured by a 912-unit high-rise apartment complex in the Pentagon City district of Arlington, Virginia. While the loan is considered to have higher-than-average leverage, with a DBRS Exit Debt Yield of 8.0%, the property was acquired by an experienced local sponsor that invested $84.5 million in the transaction. Furthermore, the property has demonstrated stable occupancy levels and revenue. Through 2017, Reis is projecting an average rental growth of 6.4% for the submarket.

University House at the Retreat (Prospectus ID#8, 1.97% of the current pool balance) is secured by the fee interest in a 178-unit student-housing complex built in 2012. The property is located in Tallahassee, Florida, approximately three miles northwest of Florida State University. As of December 2013, the reported occupancy was 71%, a decline from 98% in March 2013. The property’s occupancy does not seem to have had a negative impact on the YE2013 reported debt service coverage ratio (DSCR), which was 2.0 times (x), compared with the DBRS UW DSCR of 1.24x at issuance. All residents are required to sign 12-month leases, and all leases require parental guarantees. DBRS will continue to monitor the reported occupancy for further fluctuation.

As of June 2014 reporting, there were no loans in special servicing and only one loan on the servicer’s watchlist. Highgate Apartment (Prospectus ID#58 0.61% of the current pool balance) is secured by 110-unit multifamily property built in 1967 and located in West Goshen, Pennsylvania. At issuance, the occupancy rate was 91% and the DBRS UW DSCR was 1.45x. According to YE2013 reporting, the DSCR for the property declined to 0.83x, and occupancy was reported to be 93.6%. However, as of Q1 2014 figures, both the DSCR and occupancy rates appear to have increased. DBRS does not believe this loan to be an immediate risk for default at this time.

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 loans in the pool and the loan on the servicer’s watchlist. The June 2014 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 (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.