DBRS Confirms Ratings on FREMF 2011-K15 Mortgage Trust, Series 2011-K15

DBRS Inc. (DBRS) has today confirmed all 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. DBRS does not rate the first loss piece, Class C.

The rating confirmations reflect the overall stability of the pool’s performance since issuance. The pool comprises 90 fixed-rate loans secured by 90 multifamily properties. Since closing in November 2011, the transaction has experienced collateral reduction of 6.7% as a result of scheduled loan amortization and the repayment of one loan. According to the most recent year-end financials, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.70 times (x) and 11.4%, respectively. The WA DSCR and debt yield at issuance were 1.40x and 9.2%, respectively. The transaction also benefits from defeasance collateral, as four loans, representing 1.4% of the current pool balance, are fully defeased.

As of the February 2016 remittance, there are seven loans on the servicer’s watchlist, representing 5.2% of the current pool balance. All loans are current, with loans generally flagged by the servicer for deferred maintenance or a casualty event. In cases where a property was damaged by a fire, hailstorm or flood, the borrower is actively managing the repairs and renovations, with insurance proceeds expected to cover all costs.

The largest 15 loans, which account for 46.4% of the current pool balance, continue to perform well. According to YE2015 and annualized partial-year 2015 reporting, these loans have a WA DSCR of 1.61x, with a WA net cash flow growth of 23.6% over the DBRS underwritten figures. The largest loan in the transaction is highlighted below.

The West End 25 loan (Prospectus ID#1, 9.4% of the current pool balance) is secured by a LEED Gold certified luxury apartment building in the west end neighborhood of Washington, D.C. that was originally built as an office building in 1973. A $104.3 million renovation to convert the subject to a ten-story apartment building was finished in 2009. According to the September 2015 rent roll, the property was 97.9% occupied with average monthly rents of $3,423 per unit. While occupancy is up slightly from the September 2014 rent roll (95.4%), the average rental rate has fallen from $3,541 per unit. In comparison to the submarket, the subject performs in line in terms of vacancy, which Reis quoted at 2.1% as of YE2015. Likewise, the subject performs similarly in terms of the average submarket rental rate, which Reis quoted at $3,198 per unit for properties built between 2000 and 2009 and at $4,065 per unit for properties built after 2009. The loan reported a Q3 2015 DSCR of 1.35x, down slightly from the YE2014 DSCR of 1.40x.

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

The applicable methodologies are North American CMBS Rating Methodology (March 2016) and CMBS North American Surveillance (December 2015), which can be found on our website under Methodologies.

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

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