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Fitch Affirms FREMF 2012-K706 and Freddie Mac Pass-Through Certificates, Series K-706

February 5, 2014

NEW YORK --(BUSINESS WIRE)-- Fitch Ratings has affirmed six classes of FREMF 2012-K706 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-706. A detailed list of rating actions follows at the end of this press release. KEY RATING DRIVERS The affirmations are based on the stable performance of the underlying collateral pool. As of the January 2014 distribution date, the pool has had no delinquent or specially serviced loans. The pool's aggregate principal balance has been paid down by 0.7% to $1.22 billion from $1.23 billion at issuance. The pool's overall net operating income (NOI) has been stable with an 8.1% NOI increase compared to issuer underwriting at issuance. The largest loan of the pool (10.1% of the pool) is secured by Crystal Plaza , a 539-unit, high-rise apartment complex situated on approximately five acres in Arlington, VA . The property was built in 1967 and underwent capital improvements in 2003. The property benefits from attractive amenities, proximity to Washington, D.C. , and access to public transportation, employment centers, retail shopping, and major thoroughfares. Amenities include an outdoor swimming pool, barbecue grills and outdoor dining tables, 24-hour concierge, two 24-hour fitness centers, internet lounge, central courtyard, game room, business center, rooftop sundeck, conference room, library, two laundry facilities, and garage parking. Occupancy was 88% as of September 2013 compared to 94% at issuance. The second largest loan (5.9% of the pool) is secured by Paradise Island , a 1,112-unit, 55-building apartment complex located in Jacksonville, FL. The property was developed in four phases between 1990 and 1999 and renovated in 2010. Property amenities include four swimming pools, a community center, leasing and management offices, laundry facilities, fitness centers, racquetball, tennis, and volleyball courts, a car wash, and garages. Occupancy was 96% as of September 2013 compared to 92.5% as of January 2012 at issuance. The loan contains a $61.76 A-note and a $10 million subordinate B note ( $10.0 million ). The third largest loan (3.8% of the pool) is secured by Cascade Ridge Apartments , a 518-unit, 48 building multifamily property located in Federal Way, WA. The property was built in 1989 and renovated from 2007-2008. The property is situated on 29 acres, approximately 10 miles north of Tacoma and features an attractive amenities package. Occupancy was 93% as of June 2013 , which is in-line with 93% at issuance. Fitch affirms the following classes as indicated: FREMF 2012-K706 Multifamily Mortgage Pass-Through Certificates -- $80.9 million class A-1 at 'AAAsf'; Outlook Stable; -- $933.0 million class A-2 at 'AAAsf'; Outlook Stable; -- $1.01 billion * class X1 at 'AAAsf'; Outlook Stable; -- $1.01 billion * class X2-A at 'AAAsf'; Outlook Stable; --71.4 million class B at 'Asf'; Outlook Stable; --30.4 million class C at 'BBBsf'; Outlook Stable. Freddie Mac Structured Pass-Through Certificates, Series K-706 -- $80.9 million class A-1 at 'AAAsf'; Outlook Stable; -- $933.0 million class A-2 at 'AAAsf'; Outlook Stable; -- $1.01 billion * class X1 at 'AAAsf'; Outlook Stable. *Notional amount and interest only. Of FREMF 2012-K706, Fitch does not rate the $193.0 million interest-only class X2-B, the $193.0 million interest-only class X3, the $91.2 million class D, or $10.0 million class P. Of the Freddie Mac Structured Pass-Through Certificates, Series K-706, Fitch does not rate the $193.0 million interest-only class X3. RATING SENSITIVITY Rating Outlooks on all Fitch rated classes remain Stable. 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 'FREMF 2012-K706 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-706' ( March 12, 2012 ) new issue report, available at www.fitchratings.com . Additional information on Fitch's criteria for analyzing U.S. CMBS transactions is available in the Dec. 11, 2013 report, 'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria', which is available at ' www.fitchratings.com ' under the following headers: Structured Finance >> CMBS >> Criteria Reports Additional information is available at ' www.fitchratings.com '. Applicable Criteria and Related Research : --'Global Structured Finance Rating Criteria' ( May 24, 2013 ); --'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' ( Dec. 11, 2013 ). Applicable Criteria and Related Research : Global Structured Finance Rating Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661 U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961 Additional Disclosure Solicitation Status http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=819726 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS . IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE ' WWW.FITCHRATINGS.COM '. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Ratings Primary Analyst Martin Nunnally , +1-212-908-0871 Associate Director Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 or Committee Chairperson Mary MacNeill , +1-212-908-0785 Managing Director or Media Relations, New York Sandro Scenga , +1-212-908-0278 sandro.scenga@fitchratings.com Source: Fitch Ratings


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