Fitch Ratings has issued a presale report on FREMF 2014-K36 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-036. Fitch expects to rate the transaction and assign Rating Outlooks as follows:
FREMF 2014-K36 Multifamily Mortgage Pass-Through Certificates
Freddie Mac Structured Pass-Through Certificates, Series K-036
*Notional amount and interest only.
The expected ratings are based on information provided by the issuer as of
The certificates represent the beneficial interests in a pool of 76 commercial mortgages secured by 76 properties. The Freddie Mac Structured Pass-Through Certificates, Series K-036 (
Fitch reviewed a comprehensive sample of the transaction's collateral, including site inspections on 82.4 percent of the properties by balance and cash flow analysis of 78.2 percent of the pool.
The transaction has a Fitch stressed debt service coverage ratio of 1.30x, a Fitch stressed loan-to value of 102.3 percent, and a Fitch debt yield of 9.4 percent. Fitch's aggregate net cash flow represents a variance of 7.8 percent to issuer cash flows.
Key Rating Drivers
Fitch Leverage: The Fitch stressed LTV ratio is 102.3 percent, and is below the average of 2013 Fitch-rated, 10-year, K-Series Freddie Mac deals, which averaged 112.8 percent. The Fitch stressed DSCR, at 1.30x, is above the average of 1.12x for the 2013 Fitch- rated, 10-year, K-series
Cooperative Multifamily Housing Concentration: Five loans (4.4 percent) in the pool are secured by co-ops, including
Loan Concentration: The top ten loans constitute 33.5 percent of the pool, which is slightly lower than that of recent
Property Type Concentration: Of the pool, 100 percent is backed by multifamily properties. Four loans (4.2 percent) are classified as student housing and two loans (3.2 percent) are classified as assisted/independent living.
Partial Interest and Interest-Only Loans: 57.2 percent of the pool has a partial-term, interest-only component, and 8.4 percent of the loans in the pool are full-term, interest-only. Based on the loans' scheduled maturity balances, the pool is expected to amortize 14.3 percent over the next ten years.
Strong Origination Practices: All loans were originated by various sellers/originators according to Freddie Mac CME product guidelines and adhere to the originator best practices identified by Fitch.
Asset Volatility: Seven loans in the top ten have asset volatility scores of '4' due to their locations in historically volatile regions as determined by Fitch. Overall, 19 loans in the pool have volatility scores of '4' representing 39.4 percent of the pool balance. Of note, four loans were assigned asset volatility scores of '4' due to their tenants-in-common ownership
Fitch performed two model-based break-even analyses to determine the level of cash flow and value deterioration the pool could withstand prior to
Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report.
The Master Servicer is
The presale report is available at 'fitchratings.com.'
Additional information is available at 'fitchratings.com'.
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Fitch Ratings has issued a presale report on FREMF 2014-K36 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-036.
Fitch expects to rate the transaction and assign Rating Outlooks as follows: