DBRS Morningstar Confirms All Classes of FREMF 2012-K19 Mortgage Trust, Series 2012-K19

DBRS Limited (DBRS Morningstar) confirmed the ratings on all classes of Multifamily Mortgage Pass-Through Certificates, Series 2012-K19 issued by FREMF 2012-K19 Mortgage Trust, Series 2012-K19 as follows:

-- Class A-2 at AAA (sf)
-- Class B at AAA (sf)
-- Class C at AAA (sf)
-- Class X1 at AAA (sf)
-- Class X2-A at AAA (sf)

All trends are Stable.

The rating confirmations reflect the overall stable performance of the transaction since issuance. As of the February 2021 remittance, 77 of the original 83 fixed-rate loans secured by multifamily properties remain in the pool with a collateral reduction of 18.7% since issuance as a result of scheduled amortization and loan repayment. Based on the most recent year-end reporting available, the pool reported a weighted-average (WA) debt service coverage ratio (DSCR) and WA debt yield of 1.54 times (x) and 10.8%, respectively. The top 15 loans represent approximately 43.3% of the current pool balance. As of the January 2021 remittance, there are no specially serviced or delinquent loans and the transaction benefits from defeasance collateral, which represents 53.2% of the pool.

There are six loans on the servicer’s watchlist, representing 15.8% of the current pool balance, as of the February 2021 remittance. These loans remain current and have been flagged for reasons including failure to report financials, covenant compliance, deferred maintenance, and declines in occupancy and/or DSCR likely driven by the impact of the Coronavirus Disease (COVID-19) pandemic.

The largest loan in the pool, which is also on the servicer’s watchlist, Brooklyn Gold (Prospectus ID#1; 8.9% of the pool), is secured by a 372-unit, 13-story mid-rise apartment building located in downtown Brooklyn, New York. The loan is on the servicer’s watchlist because of a decline in the occupancy rate to 73.7% as of September 2020 compared with 98.9% as of December 2019. The occupancy decline has not borne out in the financials as yet, as the loan reported an in-place DSCR of 1.55x compared with the YE2019 occupancy rate and DSCR of 99.0% and 1.66x, respectively. The loan has remained current and has historically reported strong financials, with coverage ratios above 1.40x since issuance.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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

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

For supporting data and more information on this transaction, please log into www.viewpoint.dbrsmorningstar.com. DBRS Morningstar provides analysis and in-depth commentary in the DBRS Viewpoint platform.

For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com. The platform includes issuer and servicer data for most outstanding CMBS transactions (including non-DBRS Morningstar rated), as well as loan-level and transaction-level commentary for most DBRS Morningstar-rated and -monitored transactions.

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

The principal methodology is the North American CMBS Surveillance Methodology (March 6, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. 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.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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@dbrsmorningstar.com.

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

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The DBRS Morningstar long-term rating scale definition indicates that ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

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

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577