DBRS Confirms Ratings on FREMF 2017-K64 Mortgage Trust, Series 2017-K64

DBRS Limited (DBRS) confirmed the ratings on the following classes of Multifamily Mortgage Pass-Through Certificates, Series 2017-K64 (the Certificates) issued by FREMF 2017-K64 Mortgage Trust, Series 2017-K64 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 XAM at AA (high) (sf)
-- Class A-M at AA (sf)
-- Class B at A (low) (sf)
-- Class X2-B at BBB (high) (sf)
-- Class C at BBB (sf)

All trends are Stable.

The rating confirmations reflect the overall performance of the transaction, which has remained in line with DBRS’s expectations since issuance. The collateral consists of 71 fixed-rate loans secured by 71 multifamily properties. As of the March 2018 remittance, all loans remain in the pool and there has been a collateral reduction of 0.2% since issuance as a result of scheduled amortization. The weighted-average (WA) DBRS Term debt service coverage ratio (DSCR) and WA DBRS Debt Yield for the pool at issuance were 1.35 times (x) and 7.6%, respectively. The largest 15 loans in the pool collectively represent 53.5% of the transaction balance and, based on the most recent 2017 financials, these loans are reporting an annualized WA net cash flow (NCF) growth of 7.8% over the DBRS NCF figures, with a WA in-place DSCR and debt yield of 1.44x and 7.9%, respectively.

There are five loans on the servicer’s watchlist, representing 10.7% of the current pool balance, as of the March 2018 remittance. All five loans are current and have been flagged for non-performance-related issues. Four of the loans on the watchlist are being monitored for deferred maintenance. The fifth loan and the largest loan on the watchlist, Prospectus ID#3 – Oceanaire (4.7% of the pool), is being monitored because of a $400,000 lawsuit pertaining to a mechanic’s lien on the property. The loan reported a 1.36x DSCR for Q3 2017; DBRS does not expect the lawsuit to have a material impact on operations, but will monitor for developments through resolution.

Classes X1, X2-A, XAM and X2-B are interest-only (IO) certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

DBRS commentary and analysis is available for the largest 15 loans in the pool and all other loans sampled by DBRS at issuance in the DBRS Viewpoint platform. The platform also includes servicer reporting since issuance for all the loans in the pool. For complimentary access to this content, please register for the platform at www.viewpoint.dbrs.com.

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.

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