OREANDA-NEWS. Fitch Ratings has upgraded one class and affirmed three classes of Freddie Mac 2011-K15 multifamily mortgage pass-through certificates along with three classes of Freddie Mac structured pass-through certificates, K-015. A detailed list of rating actions follows at the end of this release.


The upgrade of the Freddie Mac 2011-K15 is based on the improved performance of the underlying collateral pool along with increased credit enhancement through principal amortization and defeasance. As of the August 2015 remittance, the pool had no delinquent or specially serviced loans. Four loans (1.4%) are fully defeased. The 90 loans' final maturity dates are in 2020 (2.2%), and 2021 (97.8%).

The pool's aggregate principal balance has been paid down by 6% to \\$1.10 billion from \\$1.165 billion at issuance. Of the remaining 90 loans, 80 (87.8% of the pool) reported year end (YE) 2014 financials. Based on the full year financial statements, the pool's overall net operating income (NOI) improved 3.53% since YE 2013 and 18.8% since issuance. Fitch has not designated any loans as Fitch Loans of Concern. No loans are on the master servicer's watchlist or have been transferred to the special servicer since issuance.

The affirmations of the Freddie Mac K-015 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 2011-K15.

The largest loan of the pool (9.28%) is secured by West End 25, a 283-unit mid-rise apartment building located in Washington, D.C. The building incorporates a number of amenities which include 24-hour attended front desk, business center, lounge area, fitness center, and garage parking. The apartments feature floor to ceiling windows, updated stainless steel appliances, and balconies. The building is situated in a Washington D.C. neighborhood that provides high-end retail, restaurants, employment centers, and access to public transportation. The sponsor of the loan is a Vornado Realty Trust which owns over 2,400 residential units and 74 office properties in the Washington D.C. metro area. The property has experienced a consistent occupancy rate of 95% during the life of the transaction. The asset continues to exhibit strong operating performance with NOI 11.5% higher than at issuance.

The second largest loan (4.05%) is secured by La Terraza Apartments, a 402-unit garden style apartment complex located in San Diego, CA. The subject is located on 27 acres and is in close proximity to employment centers, retail shopping, and a north-south interstate thoroughfare. The subject underwent significant renovations from 2008 through 2011 for the apartment units, exterior building improvements, pool, and fitness center. YE 2014 NOI declined slightly from YE 2013 due to an increase in expenses and the DSCR decreased to 1.87x in 2014 from 2.10x in 2013. Although NOI has declined, occupancy has improved to 97% as of YE 2014 from 94% at issuance.

The third largest loan (3.65%) is secured by a 512-unit 24 building apartment community located in Mountlake Terrace, WA, approximately 14 miles from Seattle. The subject was built in 1987 and has been undergoing an extensive capital improvement plan since the sponsor acquired the property in 2011. The renovation includes upgrading the apartment units, repainting the exteriors, and expanding the fitness center. The subject experienced a 9.4% increase in NOI during 2014 driven by increasing rental rates since YE 2013. The community amenities consist of an outdoor swimming pool, hiking trail, basketball court, volleyball court, and fitness center. Occupancy remains stable at 91%.


The Rating Outlook remains Stable for the rated classes as no additional rating changes are anticipated. However, if there is significant additional paydown or defeasance and overall performance remains stable, additional upgrades to class B are possible. The student and senior housing properties exhibit weaker operating and leverage metrics when compared to broader multifamily composition. Fitch will continue to monitor these concentrations. If performance deteriorates and loans default and/or transfer to special servicing, negative rating actions are possible.


No third party due diligence was provided or reviewed in relation to this rating action.

Fitch upgrades the following class:

FREMF 2011-K15 Multifamily Mortgage Pass-Through Certificates
--\\$67 million class B to 'Asf' from 'A-sf'; Outlook Stable.

Fitch has affirmed the following classes:

--\\$74.6 million class A-1 at 'AAAsf'; Outlook Stable;
--\\$866.3 million class A-2 at 'AAAsf'; Outlook Stable;
--\\$984.2 million class X1 at 'AAAsf'; Outlook Stable.

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

Freddie Mac Structured Pass-Through Certificates, Series K-015
--\\$117.9 million class A-1 at 'AAAsf'; Outlook Stable;
--\\$866.3 million class A-2 at 'AAAsf'; Outlook Stable;
--\\$984.2 million class X1 at 'AAAsf'; Outlook Stable.

Fitch does not rate interest-only class X3.