OREANDA-NEWS. Fitch Ratings has affirmed all six classes of Freddie Mac 2012-K708 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, K-708. A detailed list of rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmations of the Freddie Mac 2012-K708 are based on the stable performance of the underlying collateral pool. As of the February 2014 remittance, the pool had no delinquent or specially serviced loans since issuance. The pool's aggregate principal balance has been paid down by 1.6% to \$1.192 billion from \$1.214 billion at issuance. All 57 loans reported at least partial year 2014 financial statements. Based on full year or annualized financial statements, the pool's overall net operating income (NOI) improved 16.6% since issuance. Three loans (3.8%) are on the servicer's watchlist. One loan (2.98% of the pool and a top 15 loan) is on the watchlist due to a drop in the property's net operating income (NOI) and is a Fitch loan of concern. The remaining two are on the watchlist due to minor deferred maintenance issues. One loan (0.8%) is defeased.

The affirmations of the Freddie Mac K-708 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes for FREMF 2012-K708.

The Fitch loan of concern is Illume Apartments, a 316-unit multifamily community located in Dallas, TX. The loan was placed on the watchlist in July 2013 for a drop in debt service coverage ratio due to an increase in operating expenses. Although occupancy increased to 92% at year-end 2013 from 86% at issuance, it has since decreased to 85% as of 3Q 2014 due to the completion of competing properties in the submarket. The sponsor has lowered rents at the subject and engaged a marketing firm to rebrand the property.

The largest loan of the pool (8.15%) is secured by Jefferson Hills, a 1,020-unit mid-rise apartment complex located in Framington, MA. The complex consists of four six-story buildings, a clubhouse, and maintenance building. The complex amenities include a fitness center, swimming pool, and washer/dryer facility on each floor, basketball and volleyball courts, and covered parking. The complex is located 20 miles west of the Boston central business district (CBD) within close proximity of the Massachusetts Turnpike and Route 9. The units in the complex are smaller in square footage than the submarket average. As a result, the average in-place rents tend to be lower than the REIS submarket average rental rates.

The second largest loan (6.64%) is secured by The Encore, a 461-unit garden style apartment complex located in Alexandria, VA. The subject is located eight miles southwest of Washington D.C., and is less than a quarter mile from I-395 which is a direct artery into the capital. The property is of superior quality to the neighboring competing assets resulting in it historically outperforming its competitive set in both occupancy and average rental rate. The subject underwent significant renovations of \$45.7 million from 2006 through 2010. The units were furnished with stainless steel appliances, in-unit stackable washer/dryer units, and wood cabinets. The common area amenities were upgraded, comprising a new clubhouse, outdoor pool, fitness center, business library, and movie room.

RATINGS SENSITIVITY

The Rating Outlook remains Stable for all classes. Due to the recent issuance of the transaction and stable performance, Fitch does not foresee positive or negative ratings migration until a material economic or asset level event changes the transaction's overall portfolio-level metrics. Additional information on rating sensitivity is available in the report 'FREMF 2012-K708 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-708' (July 5, 2012), available at www.fitchratings.com.

Fitch has affirmed the following classes:

FREMF 2012-K708 Multifamily Mortgage Pass-Through Certificates

--\$75.3 million class A-1 at 'AAAsf'; Outlook Stable;
--\$919.3 million class A-2 at 'AAAsf'; Outlook Stable;
--\$994.6 million class X1 at 'AAAsf'; Outlook Stable;
--\$994.6 million class X2-A at 'AAAsf'; Outlook Stable;
--\$75.9 million class B at 'Asf'; Outlook Stable;
--\$30.3 million class C at 'BBBsf'; Outlook Stable.

Fitch does not rate classes D, interest-only class X2-B, and interest-only class X3.

Freddie Mac Structured Pass-Through Certificates, Series K-708
--\$75.3 million class A-1 at 'AAAsf'; Outlook Stable;
--\$919.3 million class A-2 at 'AAAsf'; Outlook Stable;
--\$994.6 million class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate interest-only class X3.