Printer Friendly

Fitch Affirms FREMF 2017-K71 Multifamily Mortgage PTCs & Freddie Mac Structured PTCs, Ser K-071.

New York: Fitch Ratings has affirmed eight classes of FREMF 2017-K71 Multifamily Mortgage Pass-Through Certificates and five classes of Freddie Mac Structured Pass-Through Certificates, Series K-071.

Fitch has also assigned new unenhanced ratings to three classes of FREMF 2017-K71 Multifamily Mortgage Pass-Through Certificates and three classes of Freddie Mac Structured Pass-Through Certificates, Series K-071. A detailed list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

Freddie Mac Guarantee, Credit Linked Notes: The Multifamily Mortgage Pass-Through Certificates (FREMF 2017-K71) classes A-1, A-2, A-M, X1, XAM and X3 are guaranteed by Freddie Mac. On April 6, 2018, Fitch affirmed Freddie Mac's rating at 'AAA'/'F1+'/Outlook Stable.

The affirmations of classes A-1, A-2 and A-M are based on this guarantee. Although the interest-only classes X1 and XAM are guaranteed, the long-term rating for the interest-only X1 class is based on the pass-through to the referenced A-1 and A-2 certificates and the long-term rating for the interest-only XAM class is based on the pass-through to the referenced XAM certificates. Fitch does not rate FREMF 2017-K71 class X3. Although Freddie Mac does not guarantee the Structured Pass-Through Certificates (Freddie Mac K-071), they benefit indirectly from the guarantee. The Freddie Mac K-071 classes represent a pass-through interest in the corresponding Multifamily Mortgage Pass-Through Certificates issued by FREMF 2017-K71.

Fitch's unenhanced ratings are based on an analysis of the underlying collateral pool and do not give any credit to the Freddie Mac guarantee.

Stable Performance and Loss Expectations: The overall pool performance remains stable from issuance. There are no delinquent or specially serviced loans. Only one loan, The Woods at Ridgeway (1.2% of the pool), has been designated a Fitch Loan of Concern (FLOC). Per the servicer, as of June 2018, occupancy decreased to 71.7% from 90.5% at issuance and NOI DSCR fell to 1.16x from 1.55x at issuance. Fitch will continue to monitor the loan for further performance decline.

Limited Change to Credit Enhancement: As of the October 2018 distribution date, the pool's aggregate balance has been paid down by 0.2% to $1.513 billion from $1.516 billion at issuance. The pool has a high percentage of loans that are partial interest-only (74.5%) and full-term interest-only (12.6%). As such, the pool is scheduled to pay down by only 9.1% of the initial pool balance prior to maturity.

ADDITIONAL CONSIDERATIONS

Pool and Loan Concentrations: The top 10 and top 15 loans comprise 43.0% and 54.5% of the pool, respectively. The largest loan in the pool, Mill Run At Union (10.9%), is secured by a 1,167-unit, garden-style multifamily property located in Union, NJ, approximately 20 miles west of Manhattan. Loan maturities are primarily concentrated in 2027 (98.2%), with one loan maturing in 2028 (1.8%).

Multifamily Concentration: Seven loans (7.7%) are secured by senior housing properties and one loan (0.6%) is secured by a student housing property. These multifamily sub-classifications are considered more volatile and/or require more operational experience than traditional multifamily assets.

Low Mortgage Coupons: The weighted average (WA) mortgage rate for the pool is 3.98%, well below historical averages. At issuance, Fitch's refinance analysis applied stressed refinance rates, which were 8.58% on a WA basis.

RATING SENSITIVITIES

The Rating Outlooks on all classes remain Stable. 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.

The unenhanced ratings issued today represent a detachment from the guarantee provided by Freddie Mac for their respective classes. Should the performance of the underlying collateral deteriorate enough to warrant a downgrade to any of the classes benefitting from the Freddie Mac guarantee, the unenhanced ratings would be downgraded only. Should the rating of Freddie Mac be downgraded, the long-term ratings for those classes that benefit from a guarantee would be rated at the higher of Freddie Mac or the underlying rating without the guarantee.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

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

Fitch has affirmed the following classes, which consider the guaranty from Freddie Mac:

FREMF 2017-K71 Multifamily Mortgage Pass-Through Certificates

--$133.6 million class A-1 at 'AAAsf; Outlook Stable;

--$1.096 billion class A-2 at 'AAAsf'; Outlook Stable;

--$72.0 million class A-M at 'AAAsf'; Outlook Stable;

--$1.229 billion class X1* at 'AAAsf'; Outlook Stable;

--$72.0 million class XAM* at 'AAAsf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-071

--$133.6 million class A-1 at 'AAAsf; Outlook Stable;

--$1.096 billion class A-2 at 'AAAsf'; Outlook Stable;

--$72.0 million class A-M at 'AAAsf'; Outlook Stable;

--$1.229 billion class X1* at 'AAAsf'; Outlook Stable;

--$72.0 million class XAM* at 'AAAsf'; Outlook Stable.

Fitch has affirmed the following long-term ratings that do not consider the Freddie Mac guarantee:

FREMF 2017-K71 Multifamily Mortgage Pass-Through Certificates

--$60.7 million class B at 'BBB+sf'; Outlook Stable;

--$37.9 million class C at 'BBB-sf'; Outlook Stable;

--$1.229 billion class X2-A* at 'AAAsf'; Outlook Stable.

Fitch has affirmed the following unenhanced long-term ratings. Unenhanced long-term ratings reflect the underlying creditworthiness of the certificates absent the Freddie Mac guarantee.

FREMF 2017-K71 Multifamily Mortgage Pass-Through Certificates

--$72.0 million class A-M at 'A+sf'; Outlook Stable;

--$72.0 million class XAM* at 'A+sf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-071

--$72.0 million class A-M at 'A+sf'; Outlook Stable;

--$72.0 million class XAM* at 'A+sf'; Outlook Stable.

In addition, Fitch has also assigned new unenhanced long-term ratings to the following classes:

FREMF 2017-K71 Multifamily Mortgage Pass-Through Certificates

--$133.6 million class A-1 at 'AAAsf; Outlook Stable;

--$1.096 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.229 billion class X1* at 'AAAsf'; Outlook Stable;

Freddie Mac Structured Pass-Through Certificates, Series K-071

--$133.6 million class A-1 at 'AAAsf; Outlook Stable;

--$1.096 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.229 billion class X1* at 'AAAsf'; Outlook Stable;

*Notional amount and interest-only.

Fitch does not rate the class D, X2-B and X3 certificates in FREMF 2017-K71. Fitch does not rate the class X3 certificates in Freddie Mac Structured Pass-Through Certificates, Series K-071. The class B, C and D certificates and the interest-only class X2-A and X2-B certificates in FREMF 2017-K71 are privately placed pursuant to Rule 144A.
COPYRIGHT 2019 Plus Media Solutions
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2019 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Jan 11, 2019
Words:1068
Previous Article:Fitch Affirms WFRBS 2011-C2; Revises Outlooks to Negative.
Next Article:Fitch Rates Meinian's USD Senior Unsecured Notes 'BB+(EXP)'.

Terms of use | Privacy policy | Copyright © 2020 Farlex, Inc. | Feedback | For webmasters