OREANDA-NEWS. Fitch Ratings has upgraded one class and affirmed five classes of Freddie Mac 2011-K711 multifamily mortgage pass-through certificates along with 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 RATING DRIVERS

The upgrade of class B in Freddie Mac 2011-K711 is based on the stable to improved performance of the underlying collateral pool, an increased percentage of defeased collateral, and increased credit enhancement through principal amortization.

As of the June 2016 remittance, the pool had no delinquent or specially serviced loans. The pool's aggregate principal balance has been paid down by 3.2% to $1.34 billion from $1.38 billion at issuance. Sixty-five loans (85.5% of the pool) reported full or partial year 2015 financial statements. Based on the statements, the pool's overall net operating income (NOI) improved 7.6% since YE 2014 and 26.9% since issuance. There are no loans that are considered Fitch Loans of Concern or on the servicer watchlist. Fourteen loans (23.9%) are fully defeased and include four loans (14.2%) in the top 15, including the largest loan. The loans' final maturity dates are in 2018 (4.8%) and 2019 (95.2%).

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 largest non-defeased loan (4.5%) is secured by Lincoln Meadows, a 576-unit apartment complex located in Schaumberg, IL. The submarket is highly desirable due to its strong location, close to Woodfield Mall, IKEA, and the area's major employers of Verizon and PepsiCo. The property is one of the newer complexes in the submarket and the sponsor recently completed renovating the athletic building, clubhouse, and individual units over the past couple of years.

The second non-defeased loan (3.4%) is secured by Seramonte Apartments, a 450-unit garden style apartment complex located in Hamden, CT. The subject was built in 1985 and renovated in 2007. The property's occupancy rate decreased to 93% as of September 2015 from 95% at year-end 2014. Despite the occupancy drop, the property's debt service coverage ratio (DSCR) increased to 1.56x (times) from 1.51x in 2014. The property continues to outperform its competitive set and exhibit superior operating metrics in comparison to the broader market.

The third largest non-defeased loan (2.9%) is secured by Gardens East Apartments, a 448-unit 10 building apartment community located in Palm Beach Gardens, FL. Common amenities at the complex include a leasing office, two outdoor pools, two clubhouse/fitness centers, two tennis courts, an indoor racquetball court, volleyball court, picnic areas, and playgrounds. The property has exhibited consistent strong performance with occupancy at 97% as September 2015 with a DSCR of 1.90x.

RATING SENSITIVITIES

The Positive Outlook for class C is due to a large amount of defeased collateral and the improved performance of the pool. Upgrades are likely with continued principal paydown through loan amortization or additional defeasance and stable overall performance. The Rating Outlook remains Stable for the remaining rated classes as future affirmations are expected. Downgrades are possible with performance declines.

DUE DILIGENCE USAGE

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

Fitch has upgraded the following class:

FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates

--$89.7 million class B to 'Asf' from 'A-sf'; Outlook Stable;

Fitch has affirmed the following classes and revised Outlooks where indicated:

FREMF 2012-K711 Multifamily Mortgage Pass-Through Certificates

--$65.8 million class A-1 at 'AAAsf'; Outlook Stable;

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

--$1.108 billion class X1 at 'AAAsf'; Outlook Stable;

--$1.108 billion class X2-A at 'AAAsf'; Outlook Stable;

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

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

--$65.8 million class A-1 at 'AAAsf'; Outlook Stable;

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

--$1.108 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.