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

DBRS Limited (DBRS) has today confirmed ratings on the following classes of Multifamily Mortgage Pass-Through Certificates, Series 2013-K29 issued by FREMF 2013-K29 Mortgage Trust, Series 2013-K29:

-- 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)

All trends are Stable. DBRS does not rate the first loss piece, Class D.

The confirmations reflect that the current performance of the transaction remains in line with DBRS’s expectations at issuance in May 2013. The collateral consists of 87 fixed-rate loans secured by 87 multifamily properties. At issuance, 52 loans, representing 72.2% of the current pool balance, were structured with partial interest-only (IO) periods ranging between one and three years. The IO periods have burned off for all but 15 of these loans, representing 33.1% of the current pool balance; however, all of these loans are scheduled to begin amortizing within the next 12 months. As of April 2015 remittance, the pool has an aggregate balance of $1.6 billion, representing a collateral reduction of approximately 0.9% since issuance as a result of scheduled loan amortization. The pool benefits from a strong concentration in urban and suburban markets, representing 37.7% and 47.8% of the current pool balance, respectively. The pool is, however, concentrated by property type as multifamily properties represent 100.0% of the pool. To mitigate the elevated concentration risk, DBRS applied an increased probability of default penalty to the entire pool.

As of April 2015 remittance, there are no loans in special servicing or on the servicer’s watchlist.

The largest loan, Crystal Towers (Prospectus ID#1, 14.8% of the current pool balance) is secured by a 912-unit, high-rise apartment complex located outside of Arlington, Virginia, within three miles of the Washington, D.C., central business district. The improvements consist of two 12-story buildings constructed in 1967, which have undergone various phases of renovations. Most recently, the previous owner funded a $9.8 million ($10,697 per unit) renovation between 2008 and 2012, which included the refurbishments/replacement of all windows, siding, balconies and exteriors as well as an overhaul of the rooftop fitness center. As of YE2014, the subject loan had a whole loan debt service coverage ratio (DSCR) of 1.11 times (x) compared with the DBRS underwritten DSCR of 1.25x. According to YE2014 financials, the expense ratio has increased 6% from issuance (33% to 39%), primarily as a result of an increase in management fees, utilities and real estate taxes. The property’s occupancy rate has also declined slightly to 92.8% as of December 2014 from 98.0% at issuance. The average rental rate remains strong, given the property quality and its proximity to major business centers within the capital. The loan facilitated the acquisition of the property at a purchase price of $325.0 million, which included the borrower’s contributions of approximately $84.5 million of cash equity. DBRS will continue to monitor the performance of this loan.

The DBRS analysis included an in-depth review of the 15 largest loans in the transaction, which collectively represent 43.7 % of the current pool balance.

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. The April 2015 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 related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

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

The applicable methodologies are North American CMBS Rating Methodology (March 2015) and CMBS North American Surveillance (January 2015), which can be found on our website under Methodologies.