DBRS Confirms All Classes of FREMF 2013-K33 Mortgage Trust, Series 2013-K33

DBRS Limited (DBRS) confirmed the ratings of the Multifamily Mortgage Pass-Through Certificates, Series 2013-K33 issued by FREMF 2013-K33 Mortgage Trust, Series 2013-K33 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 X2-B at A (low) (sf)
-- Class C at BBB (high) (sf)

All trends are Stable.

These rating actions reflect the overall stable performance of the transaction. The collateral consists of 86 fixed-rate loans, secured by 88 properties. As at the August 2017 remittance, all 86 of the original loans remained in the pool with a collateral reduction of 1.5% since issuance because of scheduled loan amortization. Two loans, representing 1.5% of the pool, are fully defeased.

Excluding defeasance, 83 loans, representing 97.7% of the pool, reported YE2016 net cash flow (NCF) figures. Based on the most recent year-end NCF reporting, the transaction had a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.92 times (x) and 9.7%, respectively, compared with the DBRS issuance figures of 1.60x and 7.9%, respectively. The 15 largest loans by outstanding principal balance reported a WA DSCR and WA debt yield of 2.18x and 9.8%, respectively, compared with the YE2015 figures of 2.10x and 9.4%, respectively. These 15 loans have exhibited WA NCF growth of 23.7% over the DBRS issuance figures.

As at the August 2017 remittance, there are six loans, representing 10.2% of the pool, on the servicer’s watchlist. These loans have a WA DSCR of 1.36x, according to YE2016 reporting. The largest watchlisted loan is being monitored because of a YE2016 DSCR of 0.93x; however, performance has improved — the Q1 2017 DSCR was 1.14x, as the occupancy rate has rebounded at the property. The remaining five watchlisted loans are being monitored for non-performance-related issues, including casualty events and deferred maintenance.

DBRS has provided updated loan-level commentary and analysis for larger and/or pivotal watchlisted loans in the transaction, as well as the top 15 loans, in the DBRS commercial mortgage-backed securities (CMBS) IReports platform. Registration is free. To view these and future loan-level updates provided as part of DBRS’s ongoing surveillance for this transaction, please register or log into DBRS CMBS IReports at www.ireports.dbrs.com.

The ratings assigned to Classes B and C materially deviate from the higher ratings implied by the quantitative results. DBRS considers a material deviation to be a rating differential of three or more notches between the assigned rating and the rating implied by the quantitative results that is a substantial component of a rating methodology. The deviations are warranted given sustainability of loan trends not yet demonstrated.

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.

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies.
This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.