DBRS Upgrades Two Classes and Confirms Three Classes of FREMF 2011-K15 Mortgage Trust, Series 2011-K15

DBRS Limited (DBRS) has today upgraded the following classes of the Multifamily Mortgage Pass-Through Certificates Series 2011-K15 issued by FREMF 2011-K15 Mortgage Trust, Series 2011-K15 (the Trust):

-- Class X2 to AA (sf) from AA (low) (sf)
-- Class B to AA (low) (sf) from A (high) (sf)

DBRS has also confirmed the following classes:

-- Class A-1 at AAA (sf)
-- Class A-2 at AAA (sf)
-- Class X1 at AAA (sf)

All trends are Stable.

The rating upgrades to Class B and notional Class X2 reflect the increased credit support to the bonds as a result of the overall performance of the transaction. As of the February 2017 remittance, there has been a collateral reduction of 8.2% since issuance with 90 of the original 91 loans remaining in the pool, totaling a current trust balance of $1,069 million. Since issuance, 10 loans representing 6.5% of the pool balance have been fully defeased. Based on the most recent year-end reporting for the loans, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.70 times (x) and a WA debt yield of 12.1%, improvements over the DBRS issuance figures of 1.40x and 9.2%, respectively.

As of the Febaruary 2017 remittance, there are eight loans on the servicer’s watchlist, representing 6.0% of the pool balance. Four loans were flagged for non-performance related items limited to deferred maintenance, while one loan was flagged for a legal dispute that did not affect property performance. These loans reported strong DSCRs and have exhibited a WA cash flow improvement of 41.8% since issuance. Two loans were flagged as a result of fire damage; however, insurance proceeds have been received and repair work at both properties is near completion. The remaining loan was flagged because of a low DSCR driven by elevated expenses from renovations that took place in 2015. Deteriorating property quality previously had a detrimental affect on the subject’s occupancy. An assumption of the property closed in Q2 2015, at which time the new borrower prepared a comprehensive plan and timeline to address issues and required repairs to improve property quality. To date, the servicer reported that the property has undergone a major transformation and all the renovations have been completed, which should positively affect property performance moving forward.

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:
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 principal methodologies are North American CMBS Rating Methodology (January 2017) and CMBS North American Surveillance (December 2016), which can be found on www.dbrs.com under Methodologies.

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