DBRS Upgrades One Class and Confirms Four Classes of FREMF 2012-K17 Mortgage Trust, Series 2012-K17

DBRS, Inc. (DBRS) has today upgraded the rating of FREMF 2012-K17 Mortgage Trust, Series 2012-K17, as follows:

-- Class B to A (high) (sf) from A (sf)

DBRS has also confirmed the ratings of FREMF 2012-K17 Mortgage Trust, Series 2012-K17 as follows:

-- Classes A-1 at AAA (sf)
-- Classes A-2 at AAA (sf)
-- Classes X1 at AAA (sf)
-- Classes X2-A at AAA (sf)

The trends on all classes are Stable.

This transaction comprises 71 (of the original 72) fixed-rate loans secured by 75 multifamily properties. All loans are structured with ten-year terms and five loans, representing 9.0% of the pool, have defeased since issuance. One loan, Arrowhead Apartments (Prospectus ID#7), prepaid with the May 2016 remittance. There has been a total collateral reduction of 7.8% since issuance. The rating upgrade reflects the overall strength of the pool’s performance since issuance, with a weighted-average (WA) debt service coverage ratio (DSCR) on the trust debt of 1.85 times (x) and a WA debt yield of 11.7%, according to the most recent financial reporting. These figures compare similarly with last year’s figures of 1.80x and 11.1%, respectively. The performance for the largest 15 loans has been particularly strong, with WA debt yield of 11.8%, a WA DSCR of 2.11x and WA net cash flow growth of 32.9% as of the YE2015 figures over DBRS underwritten figures.

There are five loans on the watchlist, representing 20.7% of the current pool, including the largest loan in the pool. Park Newport (Prospectus ID#1) that represents 16.2% of the current pool balance and is secured by a multifamily property in Newport Beach, California, was added to the watchlist as a result of the presence and removal of asbestos in one of the units during the time of the annual site inspection. This potential issue was known at the time of issuance and was highlighted in the Environmental Report. DBRS does not believe this will cause any difficulty in the scheduled payments of the loan as the borrower is currently in the process of remediating the issue.

DBRS has provided updated loan level commentary and analysis for larger and/or pivotal watchlisted loans, as well as for the largest 15 loans in the pool, in the DBRS CMBS IReports platform. To view these and future loan level updates provided as part of DBRS’s ongoing surveillance for this transaction, please log into DBRS CMBS IReports at www.ireports.dbrs.com.

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

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

For more information on this credit or on this industry, visit ww.dbrs.com or contact us at info@dbrs.com.