DBRS Upgrades FREMF 2011-K11 Mortgage Trust, Series 2011-K11

DBRS Limited (DBRS) upgraded the Class B rating of the Multifamily Mortgage Pass-Through Certificates Series 2011-K11 issued by FREMF 2011-K11 Mortgage Trust, Series 2011-K11 (the Trust) to AA (high) (sf) from AA (sf). The trend remains Stable.

The one-notch rating upgrade reflects the increased credit support to the bond as a result of the heavy defeasance concentration in the pool, with 23 loans, representing 30.4% of the pool balance, fully defeased as of the January 2018 remittance. Five of the defeased loans, including three loans in the top 15, have been defeased in the last year. In addition, there has been a collateral reduction of 12.2% since issuance, with 74 of the original 76 loans outstanding and a current trust balance of $1.04 billion.

Based on the most recent year-end reporting for the non-defeased loans, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) of 1.89 times (x) and a WA debt yield of 13.1% compared with the DBRS Term DSCR and DBRS Debt Yield figures for the pool at issuance of 1.37x and 8.5%, respectively.

As of the January 2018 remittance, there are four loans on the servicer’s watchlist, representing 4.7% of the pool balance. Two loans are being monitored for non-performance related issues limited to deferred maintenance, while the other two loans are being monitored for low occupancy.

At issuance, DBRS shadow-rated four loans investment grade: Regency Park Apartments (Prospectus ID#12, 2.0% of the pool balance), Oasis at Springtree (Prospectus ID#27, 1.3% of the pool balance), The Woodlands of Odessa (Prospectus ID#48, 0.7% of the pool balance) and Lake Park Village Apartments (Prospectus ID#74, 0.2% of the pool balance). DBRS confirmed that the performance of the Regency Park Apartments loan, Oasis at Springtree loan and the Lake Park Village Apartments loan remains consistent with investment-grade loan characteristics. DBRS removed the shadow rating for The Woodlands of Odessa loan due to sustained cash flow declines and poor market conditions.

As part of its review, DBRS has provided updated analysis and in-depth commentary on this loan and the loans listed below, in the DBRS Viewpoint platform.

-- Excelsior I Apartments
-- Regency Park Apartments
-- Harbor Cove Apartments
-- The Woodlands of Odessa
-- Oasis at Springtree
-- Lake Park Village Apartments

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

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.
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 under Related Documents or by contacting us at info@dbrs.com.

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 for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

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