Fitch Affirms FREMF 2012-K711 & Freddie Mac Structured Pass-Through Certificates, Ser K-711

Fitch Ratings has affirmed all six classes of FREMF 2012-K711 multifamily mortgage pass-through certificates and three classes of Freddie Mac structured pass-through certificates, series K-711. A detailed list of rating actions follows at the end of this release.

KEY RATINGS DRIVERS

The affirmations are based on overall stable performance of the underlying collateral pool. As of the October 2014 remittance, the pool had no delinquent or specially serviced loans. The pool's aggregate principal balance has been paid down by 0.8% to $1.37 billion from $1.38 billion at issuance. Seventy-six loans (100% of the pool) reported full year 2013 financial statements. Based on the full year financial statements, the pool's overall net operating income (NOI) improved 7.1% since YE 2012. Two loans (0.67%), one of which is considered a Fitch Loan of Concern, are on the master servicer's watchlist primarily due to deferred maintenance issues associated with infrastructure and life safety deficiencies.

The affirmations of the Freddie K-711 certificates are the result of the pass-through nature of the certificates, as they are dependent on the underlying ratings of corresponding classes of FREMF 2012-K711.

The Fitch loan of concern (0.5%) is secured by Eastern Parkway, a 110-unit six building apartment complex located in Brooklyn, NY. Performance of the loan has steadily declined since issuance with the full year 2013 debt service coverage ratio listed at 0.96x from 1.32x at issuance. The loan was assumed during the first quarter of 2014 and full year operations are unavailable for comparison. The servicer commentary from the watchlist indicates that a number of deferred maintenance issues exist on the property which contributed to poor rating at time of the servicer's inspection. The most recent reported occupancy was 97% in Jan. 2014 compared to 100% at issuance.

The largest loan of the pool (5.0%) is secured by Canyon Creek Apartments, a 558-unit forty-eight building apartment complex located in Bothell, WA. The apartment complex amenities include three pools, two fitness centers, a barbeque area, two fitness centers, and a racquetball court. The subject is located less than 10 miles from the offices of two the region's largest employers, Boeing and Microsoft.

The second largest loan (4.4%) is secured by, Hudson Park North, a 294-unit apartment complex situated on 2.1 acres approximately 17 miles north of New York City. The two high-rise buildings, built in 2008, are in excellent physical condition and located in the desirable submarket of Southern Westchester. The common amenities include a fitness center, clubroom, onsite parking, and concierge services. Residents can easily access New York City via the Metro North train station that is located directly across from the property.

RATINGS SENSITIVITIES

All classes maintain Stable Outlooks. 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 portfolio-level metrics. Additional information on rating sensitivity is available in the report 'FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K711' (Dec. 11, 2012), available at www.fitchratings.com.

Fitch has affirmed the following classes as indicated:

FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates

--$99.5 million class A-1 at 'AAAsf'; Outlook Stable;

--$1.042 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.141 billion class X1 at 'AAAsf'; Outlook Stable;

--$1.141 billion class X2-A at 'AAAsf'; Outlook Stable;

--$89.7 million class B at 'A-sf'; Outlook Stable;

--$34.5 million class C at 'BBBsf'; Outlook Stable.

Freddie Mac Structured Pass-Through Certificates, Series K-711

--$106.4 million class A-1 at 'AAAsf'; Outlook Stable;

--$1.042 billion class A-2 at 'AAAsf'; Outlook Stable;

--$1.141 billion class X1 at 'AAAsf'; Outlook Stable.

Of FREMF 2012-K711, Fitch does not rate the $227.7 million interest-only class X2-B, the $227.7 million interest-only class X3, and the $103.5 million class D. Of the Freddie Mac Structured Pass-Through Certificates, Series K-711, Fitch does not rate the $227.7 million interest-only class X3.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (Aug. 4, 2014);

--'U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria' (Dec. 11, 2013).

A comparison of the transaction's Representations, Warranties, and Enforcement (RW&E) mechanisms to those of typical RW&Es for the asset class is available in the following reports:

--'FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-711' (Dec. 11 2012).

--'FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates and Freddie Mac Structured Pass-Through Certificates, Series K-711 Appendix' (Dec. 11 2012).

Applicable Criteria and Related Research:

U.S. Fixed-Rate Multiborrower CMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724961

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=906335

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.

Contacts:

Fitch Ratings
Primary Analyst
Jay Bullie
Associate Director
+1-312-368-2079
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

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