Morningstar DBRS Assigns Provisional Credit Ratings to Freddie Mac Structured Pass-Through Certificates, Series K-170

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the following classes of Structured Pass-Through Certificates (SPCs), Series K-170 (the Certificates) to be issued by Freddie Mac Structured Pass-Through Certificates, Series K-170 (Freddie Mac SPCs K-170):

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

All trends are Stable.

The Class X1 balance is notional.

The collateral consists of 59 fixed-rate loans secured by 59 commercial properties, including 28 garden-style multifamily properties, seven mid-rise apartment complexes, two high-rise apartment complexes, 10 MHCs, one independent living community, one assisted living facility, five age-restricted communities, three student-housing complexes, and two military-concentrated communities. Of the pool, 57 loans, representing 94.7% of the pool balance, have 10-year loan terms while two loans, representing 5.2% of the pool balance, have 11-year loan terms. The transaction is a sequential-pay pass-through structure.

Morningstar DBRS analyzed the pool to determine the provisional credit ratings, reflecting the long-term probability of loan default within the term as well as its liquidity and maturity. When Morningstar DBRS measured the cut-off date balances against the Morningstar DBRS NCF and their respective actual constants, the resulting WA Morningstar DBRS Term DSCR was 1.22x, which indicates moderate midterm default risk. Thirty-nine loans, representing 62.1% of the pool balance, have a Morningstar DBRS Term DSCR at or less than 1.21x, a threshold that indicates a higher likelihood of midterm default. Only one loan, representing 10.4% of the pool, has a Morningstar DBRS DSCR of less than 1.00x. One loan, representing 1.0% of the pool, has a Morningstar DBRS Term DSCR at or higher than 1.59x, a threshold that indicates a lower likelihood of midterm default.

The Federal Home Loan Mortgage Corporation (Freddie Mac) will convey Classes A-1, A-2, A-M, X1, XAM, and X3 of the FREMF 2025-K170 Mortgage Trust Multifamily Mortgage Pass-Through Certificates, Series K170 (FREMF 2025-K170) transaction into the subject Freddie Mac SPCs K-170 trust to issue corresponding classes of Structured Pass-Through Certificates (SPCs) that Freddie Mac guarantees (see the Transaction Structural Features section for more information). All Morningstar DBRS-rated classes will be subject to ongoing surveillance, confirmation, upgrade, or downgrade after the date of issuance. Morningstar DBRS assigned the provisional credit ratings to the FREMF 2025-K170 Certificates and the Freddie Mac Structured Pass-Through Certificates, Series K-170 (Freddie Mac SPCs K-170) without giving effect to the Freddie Mac guarantee. Please see the FREMF 2025-K170 Structural and Collateral Term Sheet for more information about the structure of FREMF 2025-K170.

Morningstar DBRS' credit rating on the certificates addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Distribution amounts, and/or Interest Distribution amounts for the rated classes.

Morningstar DBRS' credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, Static Prepayment Premiums and Yield Maintenance Charges.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk
that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
ESG Considerations had a relevant effect on the credit analysis.

Environmental (E) Factors
The following Environmental factor had a relevant effect on the credit analysis: Emissions, Effluents, and Waste. The Environmental Site Assessments identified one Business Environmental Risk, related to multiple violations reported on the subject property related to a wastewater treatment plant on a portion of the property. Morningstar DBRS increased the LGD on the relevant loan to mitigate the risk. Morningstar DBRS considered the environmental risk a relevant Environmental factor.

There were no Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024): https://dbrs.morningstar.com/research/437781.

Class X1 is an interest-only (IO) certificate that references 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 credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

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

The principal methodology applicable to the credit rating is North American CMBS Multi-Borrower Rating Methodology (April 9, 2025): https://dbrs.morningstar.com/research/451739.

Other methodologies referenced in this transaction are listed at the end of this press release.

With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

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

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of final credit ratings on the above-mentioned securities is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
22 West Washington Street
Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- North American Commercial Mortgage Servicer Rankings (August 23, 2024)
https://dbrs.morningstar.com/research/438283

-- Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024):
https://dbrs.morningstar.com/research/439702

-- Legal Criteria for U.S. Structured Finance (December 03, 2024)
https://dbrs.morningstar.com/research/444064

-- North American CMBS Insight Model v 1.3.0.0 (April 9, 2025):
https://dbrs.morningstar.com/research/451739

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.