structured finance: cmbs fremf 2018-k82 mortgage trust

O C T O B E R 2 0 1 8

STRUCTURED FINANCE: CMBS

PRESALE REPORT

FREMF 2018-K82 Mortgage Trust

Capital Structure 3Transaction Summary 4Rating Considerations 5DBRS Credit Characteristics 7Largest Loan Summary 8DBRS Sample 9Transaction Concentrations 11Loan Structural Features 12

Sherwood Crossing and Bayshore Landing 14Sterling Estates, Norcross and Millenium Estates 20The Beacon Of Groveton 26St. Moritz Apartment Homes 31Crystal Creek 36Echelon Glen Apartments 41Village at Six Flags, Greenwood Estates and

Three Crowns 45Vistara at San Tan Village 51The 1800 at Barrett Lakes 55The Oasis 59The Fountains At Forestwood 63Vista at Grand Crossing 68Birch Pointe 72Aspect 77

Transaction Structural Features 82Surveillance 82CMBS Rating Methodology – Highlights 82Glossary 86

Table of Contents

Kevin MammoserSenior Vice President+1 312 332 [email protected]

Kelcie BrownAssistant Vice President+1 312 332 [email protected]

Erin StaffordManaging Director+1 312 332 [email protected]

David FacklerVice President+1 312 332 [email protected]

Structured Finance: CMBS 3

PRESALE REPORT — FREMF 2018-K82 OCTOBER 2018

Capital Structure

Description Rating Action Balance Subordination DBRS Rating Trend

Class A-1 New Rating - Provisional $88,348,000 19.625% AAA (sf) Stable


Class A-M New Rating - Provisional $75,294,000 14.000% AA (low) (sf) Stable

Class X1 New Rating - Provisional $1,075,877,000 -- AAA (sf) Stable

Class XAM New Rating - Provisional $75,294,000 -- AA (sf) Stable

Class X3 NR $187,400,906 -- NR n/a

Class X2-A New Rating - Provisional $1,075,877,000 -- AAA (sf) Stable

Class X2-B New Rating - Provisional $262,694,906 -- BBB (sf) Stable

Class B New Rating - Provisional $53,543,000 10.000% BBB (high) (sf) Stable

Class C New Rating - Provisional $33,465,000 7.500% BBB (low) (sf) Stable

Class D NR $100,392,906 -- NR n/a

Notes:NR = Not Rated.1. Classes B, C, D, X2-A and X2-B will be privately placed.2. Classes A-1, A-2, A-M, X1, XAM and X3 are being conveyed by Freddie Mac into the SPC Trust described below.3. The X1, XAM, X3 X2-A and X2-B balances are notional. The Class X1, XAM, X3, X2-A and X2-B balances are interest-only (IO) certificates that reference a single rated

tranche or multiple rated tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.

Freddie Mac Structured Pass-Through Certificates, Series K-082

Description Rating Action Balance Subordination DBRS Rating Trend



Class X1 New Rating - Provisional $1,075,877,000 -- AAA (sf) Stable

Class XAM New Rating - Provisional $75,294,000 -- AA (sf) Stable

Class A-M New Rating - Provisional $75,294,000 14.000% AA (low) (sf) Stable

Class X3 NR $187,400,906 -- NR n/a

Notes:NR = not rated.1. Classes A-1, A-2, X1, XAM, A-M and X3 are rated without giving effect to the Freddie Mac guarantee.2. The X1, XAM and X3 balances are notional. The Class X1, XAM and X3 balances are interest-only (IO) certificates that reference a single rated tranche or multiple rated

tranches. The IO rating mirrors the lowest-rated reference tranche adjusted upward by one notch if senior in the waterfall.



Transaction Summary

POOL CHARACTERISTICS

Trust Amount $1,338,571,906 Wtd. Avg. Interest Rate 4.366%

Number of Loans 62 Wtd. Avg. Remaining Term 118

Number of Properties 62 Wtd. Avg. Remaining Amortization 360

Average Loan Size $21,589,869 Total DBRS Expected Amortization3 -7.0%

Wtd. Avg. DBRS Term DSCR1 1.33x Wtd. Avg. DBRS Term DSCR Whole Loan 1.33x

Wtd. Avg. DBRS Refi DSCR1 0.84x Wtd. Avg. DBRS Refi DSCR Whole Loan 0.84x

Wtd. Avg. DBRS Debt Yield1 7.2% Wtd. Avg. DBRS Debt Yield Whole Loan 7.2%

Wtd. Avg. DBRS Exit Debt Yield1 7.8% Wtd. Avg. DBRS Exit Debt Yield Whole Loan 7.8%

Top Ten Loan Concentration 44.0% Avg. DBRS NCF Variance -5.9%

1. Includes pari passu debt, but excludes subordinate debt.2. Excludes shadow-rated loans and co-ops.3. For certain ARD loans, expected amortization may include amortization expected to occur after the ARD but prior to single/major tenant expiry.

PARTICIPANTS

Depositor Banc of America Merrill Lynch Commercial Mortgage, Inc.

Mortgage Loan Sellers Federal Home Loan Mortgage Corporation (62 loans; 100% of the pool)

Master Servicer KeyBank National Association

Special Servicer KeyBank National Association

Certficate Administrator Citibank, N.A.

Trustee Citibank, N.A.

Multifamily Delinquency Rate Comparison

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

Q3

2007

Q1

2008

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Q1

2011

Q3

2011

Q1

2012

Q3

2012

Q1

2013

Q3

2013

Q1

2014

Q3

2014

Q1

2015

Q3

2015

Q1

2016

Q3

2016

Q1

2017

Q3

2017

Q1

2018

CMBS Multifamily Delinquency Rate Freddie Mac Delinquency Rate



Rating Considerations

The collateral consists of 62 fixed-rate loans secured by 62 commercial properties. All the loans within the transaction are structured with ten-year loan terms with the exception of Vistara at San Tan Village which is structured as an 11-year loan term. The transaction is a sequential-pay pass-through structure. The conduit pool was analyzed to determine the provisional ratings, reflecting the long-term probability of loan default within the term and its liquidity at maturity. When the cut-off loan balances were measured against the DBRS Stabilized NCF and their respective actual constants, two loans, representing 4.3% of the aggregate pool balance, had a DBRS Term DSCR below 1.15x, a threshold indicative of a higher likelihood of mid-term default. Additionally, to assess refinance risk given the current low-interest-rate environment, DBRS applied its refinance constants to the balloon amounts. This resulted in 49 loans, representing 80.4% of the pool, having refinance DSCRs below 1.00x and 40 loans, representing 74.9% of the pool, with refinance DSCRs below 0.90x.

Classes A-1, A-2, A-M, X1, XAM and X3 of the FREMF 2018-K82 Mortgage Trust, Series 2018-K82 (FREMF 2018-K82) have been conveyed into a trust by Freddie Mac to issue corresponding classes of Structured Pass-Through Certificates (SPCs) guaranteed by Freddie Mac (see Transaction Structural Features section for more information). All DBRS-rated classes will be subject to ongoing surveillance, confirmations, upgrades or downgrades by DBRS after the date of issu-ance. The initial ratings of the FREMF 2018-K82 Certificates and the Freddie Mac Structured Pass-Through Certificates, Series K-082 (Freddie Mac SPCs K-082) are assigned without giving effect to the Freddie Mac guarantee. See the FREMF 2018-K82 Structural and Collateral Term Sheet for more information about the structure of the Freddie Mac SPCs K-082.

STRENGTHS• The loans benefit from strong origination practices.

� Loans on Freddie Mac’s balance sheet, which are originated according to the same policies as those for securitization, have an extremely low delinquency rate of 0.01% as of June 2018. This compares favorably with the delinquency rate for CMBS multifamily loans of approximately 3.52% over the same period.

� As of August 31, 2018, Freddie Mac has securitized 13,856 loans totaling approximately $265.4 billion in guaranteed issu-ance balance. To date, Freddie Mac has not realized any credit losses on its guaranteed issuances, though a combined $11.9 million in total losses has been realized by B-Piece Investors, representing less than one basis point of total issuance.

• The loans in the transaction benefit from experienced and financially strong borrowers compared with typical CMBS multifamily loans. Many of the borrowers are repeat clients of Freddie Mac.

• Underlying collateral analysis is prudent, as evidenced by an average DBRS NCF variance of -5.9% on the sampled loans. In general, revenue has been set to levels similar to the recent T-12 amount and lower than a recent annualized rent roll.

• The pool benefits from a low concentration of properties located in tertiary markets, with only 3 loans, totaling 1.4% of the transaction balance, located in such markets. 54 loans, representing 98.6% of the pool, are located in suburban markets and none of the collateral properties in this transaction are located in urban or rural markets.

CHALLENGES AND CONSIDERATIONS• The transaction has a high concentration of loans suffering from elevated refinance risk. Fifty-nine loans, representing

74.9% of the pool, have DBRS Refi DSCRs less than 1.00x. Forty of these loans, representing 74.9% of the pool, have DBRS Refi DSCRs less than 0.90x.

• The DBRS Refi DSCRs for these loans are based on a WA stressed refinance constant of 9.3%, which implies an interest rate of 8.6%, amortizing on a 30-year schedule. This represents a significant stress of 4.2% over the WA contractual inter-est rate of the loans in the pool.

• Fifteen loans, representing 26% of the pool, including four of the top 14 loans in the pool, are structured with full-term IO payments. An additional 44 loans, comprising 72.4% of the pool, have remaining partial IO periods ranging from 24 to 84 months.



� The DBRS Term DSCR is calculated by utilizing the amortizing debt service obligation and the DBRS Refi DSCR is calculated considering the balloon balance and lack of amortization when determining refinance risk. DBRS determines POD based on the lower of term or refinance DSCR so loans that lack amortization are treated more punitively.

• The pool is concentrated by property type, as multifamily properties represent 100.0% of the collateral. Six loans (8.4% of the pool) are secured by non-traditional property types (i.e., MHC, student housing, cooperatives, age-restricted housing and assisted living).

� Multifamily properties benefit from staggered lease rollover and generally low expense ratios, compared with other property types. While revenue is quick to decline in a downturn because of the short-term nature of the leases, it is also quick to respond when the market improves. Analysis performed on the 30 sampled loans indicates that most markets are displaying strong vacancy and rent growth figures, with positive year-over-year trends being established. Excluding cooperatives, many of the non-traditional multifamily uses have been modeled with an increase to the loan’s POD.



DBRS Credit Characteristics

DBRS TERM DSCR DBRS REFI DSCR

DSCR% of the Pool

(Trust Balance)1% of the Pool (Whole Loan) DSCR

% of the Pool (Trust Balance)1

% of the Pool (Whole Loan)

0.00x-0.90x 0.0% 0.0% 0.00x-0.90x 89.5% 89.5%

0.90x-1.00x 0.0% 0.0% 0.90x-1.00x 8.4% 8.4%

1.00x-1.15x 4.3% 4.3% 1.00x-1.15x 1.0% 1.0%

1.15x-1.30x 68.6% 68.6% 1.15x-1.30x 0.7% 0.7%

1.30x-1.45x 0.0% 0.0% 1.30x-1.45x 0.0% 0.0%

1.45x-1.60x 3.3% 3.3% 1.45x-1.60x 0.2% 0.2%

1.60x-1.75x 15.2% 15.2% 1.60x-1.75x 0.2% 0.2%

>1.75x 8.6% 8.6% >1.75x 0.0% 0.0%

Wtd. Avg. 1.33x 1.33x Wtd. Avg. 0.84x 0.84x

DBRS DEBT YIELD DBRS EXIT DEBT YIELD

Debt Yield% of the Pool

(Trust Balance)1% of the Pool (Whole Loan) Debt Yield

% of the Pool (Trust Balance)1

% of the Pool (Whole Loan)

0.0%-6.0% 0.0% 0.0% 0.0%-6.0% 0.0% 0.0%

6.0%-8.0% 94.6% 94.6% 6.0%-8.0% 78.1% 78.1%

8.0%-10.0% 5.1% 5.1% 8.0%-10.0% 20.8% 20.8%

10.0%-12.0% 0.2% 0.2% 10.0%-12.0% 0.7% 0.7%

12.0%-14.0% 0.2% 0.2% 12.0%-14.0% 0.2% 0.2%

14.0%-16.0% 0.0% 0.0% 14.0%-16.0% 0.2% 0.2%

>16.0% 0.0% 0.0% >16.0% 0.0% 0.0%

Wtd. Avg. 7.2% 7.2% Wtd. Avg. 7.8% 7.8%

1. Includes pari passu debt, but excludes subordinate debt.



Largest Loan Summary

LOAN DETAIL

Loan NameTrust Loan

Amount % of Pool

DBRS Shadow Rating

DBRS Term DSCR

(x)

DBRS Refi

DSCR (x)

DBRS Debt Yield

DBRS Exit Debt

Yield

Sherwood Crossing and Bayshore Landing $131,919,000 9.9% n/a 1.15 0.82 6.8% 7.6%

Sterling Estates, Norcross and Millenium Estates $62,955,000 4.7% n/a 1.18 0.82 7.1% 8.1%

The Beacon Of Groveton $55,500,000 4.1% n/a 1.21 0.80 7.0% 7.4%

St. Moritz Apartment Homes $55,000,000 4.1% n/a 1.70 0.80 7.4% 7.4%

Crystal Creek $54,600,000 4.1% n/a 1.19 0.83 7.2% 7.7%

Echelon Glen Apartments $50,155,000 3.7% n/a 1.16 0.81 6.9% 7.5%

Village at Six Flags, Greenwood Estates and Three Crowns $49,817,000 3.7% n/a 1.18 0.83 7.1% 8.2%

Vistara At San Tan Village $48,129,000 3.6% n/a 1.87 0.83 7.8% 7.8%

The 1800 At Barrett Lakes $40,910,000 3.1% n/a 1.20 0.85 7.2% 7.9%

The Oasis $39,740,000 3.0% n/a 1.21 0.86 7.3% 8.0%

The Fountains At Forestwood $38,209,000 2.9% n/a 1.19 0.88 7.5% 8.2%

Vista At Grand Crossing $37,232,000 2.8% n/a 1.09 0.78 6.7% 7.3%

Birch Pointe $34,742,000 2.6% n/a 1.58 0.74 6.8% 6.8%

Aspect $34,100,000 2.5% n/a 1.97 0.90 8.3% 8.3%

Gwynnbrook Townhomes $25,950,000 1.9% n/a 1.16 0.76 6.7% 7.1%

PROPERTY DETAIL

Loan NameDBRS

Property Type City StateYear Built

SF/ Units

Loan per

SF/Units

Maturity Balance per

SF/Units

Sherwood Crossing and Bayshore Landing Multifamily Various MD Various 792 $166,564 $148,402

Sterling Estates, Norcross and Millenium Estates MHC Various Various Various 1,189 $52,948 $46,208

The Beacon Of Groveton Multifamily Alexandria VA 2012 290 $191,379 $181,365

St. Moritz Apartment Homes Multifamily Lakewood CO 1986 360 $152,778 $152,778

Crystal Creek Multifamily Henderson NV 1989 528 $103,409 $96,438

Echelon Glen Apartments Multifamily Voorhees NJ 1979 432 $116,100 $105,838

Village at Six Flags, Greenwood Estates and Three Crowns MHC Various Various Various 1,249 $39,886 $34,849

Vistara At San Tan Village Multifamily Gilbert AZ 2017 366 $131,500 $131,500

The 1800 At Barrett Lakes Multifamily Kennesaw GA 1988 500 $81,820 $74,798

The Oasis Multifamily Colorado Springs CO 1998 252 $157,698 $144,165

The Fountains At Forestwood Multifamily Fort Myers FL 1985 397 $96,244 $88,613

Vista At Grand Crossing Multifamily Katy TX 2014 351 $106,074 $97,159

Birch Pointe Multifamily Beaverton OR 1989 248 $140,089 $140,089

Aspect Multifamily Lone Tree CO 2015 230 $148,261 $148,261

Gwynnbrook Townhomes Multifamily Baltimore MD 1962 322 $80,590 $76,327

Note: Loan metrics are based on whole-loan balances.



DBRS Sample

DBRS SAMPLE RESULTS

Prospectus ID Loan Name % of Pool

DBRS NCF

DBRS NCF Variance

DBRS Major Variance Drivers

DBRS Property Quality

1 Sherwood Crossing and Bayshore Landing 9.9% $8,949,835 -4.0% Vacancy; Expenses; Mgmt. Fee Average

2 Sterling Estates, Norcross and Millenium Estates 4.7% $4,459,674 -6.3% Vacancy; Expenses; Mgmt. Fee Average

3 The Beacon Of Groveton 4.1% $3,884,839 -3.3% Vacancy; Expenses; Replacement Reserves Average +

4 St. Moritz Apartment Homes 4.1% $4,069,379 -4.3% Vacancy; Other Income; Mgmt. Fee Average

5 Crystal Creek 4.1% $3,910,005 -5.0% Vacancy; Mgmt. Fees; Bad Debt Average

6 Echelon Glen Apartments 3.7% $3,433,124 -7.7% Vacancy; Mgmt. Fee Average

7 Village at Six Flags, Greenwood Estates and Three Crowns 3.7% $3,550,717 -7.5% Vacancy; Mgmt. Fee Average

8 Vistara At San Tan Village 3.6% $3,727,876 -1.4% Vacancy; Expenses Average +

9 The 1800 At Barrett Lakes 3.1% $2,955,441 -4.2% Vacancy; Expenses Average

10 The Oasis 3.0% $2,895,672 -3.3% Mgmt. Fee; Vacancy Average

11 The Fountains At Forestwood 2.9% $2,877,577 -7.5% Vacancy; Mgmt. Fee; Expenses; Replacement Reserves Average

12 Vista At Grand Crossing 2.8% $2,486,926 -12.6% Expenses; Mgmt. Fee Average +

13 Birch Pointe 2.6% $2,375,066 -8.4% Expenses; Vacancy; Mgmt. Fee Average

14 Aspect 2.5% $2,843,274 -5.3% Vacancy; Expenses; Mgmt. Fee Average +

15 Gwynnbrook Townhomes 1.9% $1,738,103 -6.9% Expenses; Bad Debt; Mgmt. Fee Average -

16 River View 1.9% $1,770,016 -6.8% Vacancy; Mgmt. Fee Average

18 Crystal Creek Luxury Apartments 1.8% $1,733,396 -5.8% Bad Debt; Concessions; Mgmt. Fee Average

19 The Zeke 1.8% $1,682,411 -7.7% Vacancy; Bad Debt; Other Income Average

25 The Boulevard 1.5% $1,413,297 -9.1% Vacancy; Expenses Average

28 Villas At Mountain Vista 1.4% $1,341,448 -3.3% Mgmt. Fee; Vacancy Average

29 Prestonwood Trails 1.3% $1,412,311 -3.0% Mgmt. Fee; Expenses Average -

31 Skyline Gateway Apartments 1.2% $1,152,230 -5.4% Vacancy; Expenses Average

32 Foothills Apartments 1.1% $1,086,303 -4.1% Vacancy; Expenses Average

33 Stoneleigh Place 1.1% $1,138,987 -5.0% Vacancy; Mgmt. Fee; Expenses Average -

56 Seymour O'Brien Manor Apartments 0.1% $138,428 -10.4% Expenses; Mgmt. Fee;

Bad Debt Below Average



DBRS SITE INSPECTIONSThe DBRS sample included 30 of the 62 loans in the pool. Site inspections were performed on 30 of the 62 properties in the portfolio (70.1% of the pool by allocated loan balance). DBRS conducted meetings with the on-site property manager, leasing agent or a representative of the borrowing entity for 53.0% of the pool. The resulting DBRS property quality scores are highlighted in the following charts:

DBRS CASH FLOW ANALYSISA cash flow underwriting review and a cash flow stability and structural review were completed on 30 of the 62 loans, representing 70.1 % of the pool, by loan balance. For the loans not subject to cash flow review, DBRS applied the average NCF variance of the DBRS sample pool.

DBRS generally adjusted revenue to be no higher than the most recent T-12 level and in some instances, DBRS applied an additional vacancy or concession adjustment to account for new supply coming online in the market, the lack of operating history or lack of stabilization. Generally, most expenses were recognized based on the higher of the T-12 historical figure, plus an inflation factor or the borrower’s budgeted figures. Real estate taxes and insurance premiums were inflated if a current bill was not provided. Capex was deducted based on the greater of the engineer’s inflated estimates or the DBRS minimum of $250 per unit for multifamily properties. If a significant upfront capex reserve was established at closing, DBRS reduced its recognized costs. No upside potential, such as anticipated rental increases or prospective tenant rent, was recognized. The DBRS sample had an average NCF variance of -5.9% and ranged from -1.4% (Vistara at San Tan Village) to -12.6% (Vista at Grand Crossing).

DBRS Sampled Property Quality

0.0%

0.2%

Above Average

Below Average

% ofSampleProperty Quality

# of Loans

0

1

0.0%Excellent 0

6.3%Average (-) 3

18.7%Average (+) 4

74.9%Average 22

0.0%Poor 0

DBRS Sampled Property Type

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

AnchoredRetail

Full ServiceHotel

Industrial LimitedService Hotel

MHC Multifamily Office RegionalMall

Self Storage

UnanchoredRetail

WeaklyAnchored

% o

f Poo

l

% o

f Sam

ple

Above Average Average + Average Average - Below Average Pool



Transaction Concentrations

DBRS Property Type Geography

Full Service Hotel 0.0%

MHC 8.4%

Multifamily 91.6%

Industrial 0.0%

Anchored Retail 0.0%14.6%

9.6%9.0%8.6%

8.4%

14.9%

TXMD

COFLGA

NV

% of PoolProperty Type # of Loans % of PoolState # of Properties5

1035

6

5

0

6

56

0

0

Limited Service Hotel 0.0% 0

Weakly Anchored 0.0% 0

0

35.0%All others 28

Office 0.0%

0Regional Mall 0.0%

0Unanchored Retail 0.0%

0Self Storage 0.0%

Loan Size DBRS Market Type

Very Large (>$20.0 million)

Large ($10.0-$20.0 million)

Medium ($5.0-$10.0 million)

Small ($2.0-$5.0 million)

Very Small (<$2.0 million)

74.0%

24.7%

3.8%

0.7%

0.4%

% of PoolLoan Size

# ofLoans % of PoolMarket Type # of Loans

26

23

7

33

0.0%97.4%

0.0%

2.6%

Urban

Suburban

TertiaryRural

4

0

58

0

Largest Property Locations

1) Sherwood Crossing and Bayshore Landing Various, MD

2) Sterling Estates, Norcross and Millenium Estates Various, Various

3) The Beacon Of Groveton Alexandria, VA

4) St. Moritz Apartment Homes Lakewood, CO

6) Echelon Glen Apartments Voorhees, NJ

7) Village at Six Flags, Greenwood Estates and Three Crowns Various, Various

8) Vistara At San Tan Village Gilbert, AZ

9) The 1800 At Barrett Lakes Kennesaw, GA

10) The Oasis Colorado Springs, CO

11) The Fountains At Forestwood Fort Myers, FL

12) Vista At Grand Crossing Katy, TX

13) Birch Pointe Beaverton, OR

14) Aspect Lone Tree, CO

5) Crystal Creek Henderson, NV



Loan Structural Features

Pari Passu Notes: None of the loans in the trust have pari passu debt.

Additional Debt: All the loans are permitted to obtain additional secured debt, provided exclusively at Freddie Mac’s option, beginning one year after origination. Conditions for providing additional debt generally include a combined LTV equal to the lower of 80.0% or the original LTV and a combined amortizing DSCR of at least 1.25x. In each instance, the additional debt would be subordinate in right of payment to the trust balance and would be subject to a standard intercreditor agreement reviewed by DBRS.

Subordinate Debt: Two loans representing 3.7% of the pool are partially secured by a subordinate mortgage. The Fountains at Forestwood, representing 2.9% of the pool, has a $7.5 million mezzanine loan from Hillcrest Fund Lender II LLC that matures on August 1, 2025. Rolling Hills, representing 0.8% of the pool, is subject to a $903,281 subordinate loan and subordinate mortgage from the Pennsylvania Housing Finance Agency (PHFA) that matures on July 31, 2029.

SUBORDINATE DEBT

Loan Name Trust BalancePari Passu

BalanceB-Note

Balance

Mezz/ Unsecured

Debt Balance

Future Mezz/ Unsecured Debt

(Y/N)Total Debt Balance

The Fountains At Forestwood $38,209,000 $0 $0 $7,518,847 N $45,727,847

Rolling Hills $10,593,383 $0 $0 $903,281 N $11,496,664

Interest Only DBRS Expected Amoritization

Full IO

Partial IO

Amortizing

26.0%

72.4%

1.6%0.0%

43.7%

28.7%

26.0%0%0.0%-5.0%5.0%-10.0%

10.0%-15.0%

% of PoolIO Term # of Loans % of Pool # of Loans

15

0 22

17

15

443

ExpectedAmoritization

1.4%15.0%-20.0% 2

0.2%>25.0% 1

0.0%20.0%-25.0% 0

Note: For certain ARD loans, expected amortization may include amortization expected to occur after the ARD but prior to single/major tenant expiry.

Note: ARD loans

Leasehold: None of the properties are secured by a leasehold interest



RESERVE REQUIREMENT BORROWER STRUCTURE

Type Loans % of Pool Type Loans % of Pool

Tax Ongoing 61 96.3% SPE with Independent Director and Non-Consolidation Opinion

0 0.0%

Insurance Ongoing 35 48.0% SPE with Independent Director Only

0 0.0%

CapEx Ongoing 59 94.6% SPE with Non-Consolidation Opinion Only

17 50.8%

Leasing Costs Ongoing1 0 0.0% SPE Only 45 49.2%

1. Percent of office, retail, industrial and mixed use assets based on DBRS property types.

Sponsor Strength: DBRS considers the sponsorship for all 62 loans, totaling 100% of the pool, to be strong because of extensive experience in the commercial real estate sector and in a significant financial wherewithal.

Property Release: Eight loans which are cross collateralized in three different loan groups, representing 18.3% of the pool, have loan documents that allow for the release of one or more properties, or a portion of the mortgaged property, subject to certain DSCR, LTV and/or debt yield conditions. Two of these loans, Sherwood Crossing (7.9% of the pool) and Bayshore Landing (2.0% of the pool), allow for the release with no release premium. The other six loans require 110% paydown of the released loan balance.

Property Substitution: There are no loans in the pool that allow for the substitution of properties.

Terrorism Insurance: Terrorism insurance is required and in place for all loans.

DBRS Sponsor Strength

% of PoolSponsor Strength # of Loans

100.0%0.0%

0.0%

0.0%

Average

Strong

WeakBad (Litigious)

0

620

0



COLLATERAL SUMMARY

DBRS Property Type Multifamily Year Built 1984/1987

City, State Various, MD Physical Occupancy 97.2%

Units 792 Physical Occupancy Date June 2018

The two cross-collateralized loans are secured by the borrower’s fee interest in two multifamily properties totaling 792 units located within the Baltimore MSA. The two properties are Sherwood Crossing, a 634-unit complex located in Elkridge, Maryland and Bayshore Landing, a 158-unit complex located in Annapolis, MD. Combined loan proceeds of $131.9 million will refinance $127.4 million of existing debt. The borrower has $17.8 million of cash equity remaining in Sherwood Crossing and $4.8 million of cash equity remaining in Bayshore Landing based on their combined acquisition price in 2016 of $149.6 million and subsequent capex of $4.9 million. The ten-year loan is IO for the first four years and amortizes over a 30-year schedule thereafter.

Various, MD

Sherwood Crossing and Bayshore Landing

Loan SnapshotSeller

FREMFOwnership Interest

Fee SimpleTrust Balance ($ million)

$131.9Loan psf/Unit

$166,564Percentage of the Pool

9.9%Loan Maturity/ARD

August 2028Amortization

30 YearsDBRS Term DSCR

1.15xDBRS Refi DSCR

0.82xDBRS Debt Yield

6.8%DBRS Exit Debt Yield

7.6%

Competitive SetMultifamily, Large, MD,

SuburbanMedian Debt Yield

8.1%Median Loan PSF/Unit

$70,117

Debt Stack ($ million)Trust

$131.9Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$131.9

Loan PurposeRefinance

Equity Contribution/

(Distribution) ($ million)$0.0



SHERWOOD CROSSING AND BAYSHORE LANDING – VARIOUS, MD

PORTFOLIO SUMMARY

Property City, State Units Year BuiltCut-Off Date Loan

Amount% of Cut-Off Date

Loan Amount Occupancy

Sherwood Crossing Elkride, MD 634 1987 $105,601,000 80.0% 97.0%

Bayshore Landing Annapolis, MD 158 1984 $26,318,000 20.0% 98.1%

Total/Wtd. Avg. Various, MD 792 Various $131,919,000 100.0% 97.2%

Sherwood Crossing is a 634-unit, garden-style complex located 15 miles southwest of the Baltimore CBD. The property was constructed in 1987 and has undergone various interior and exterior renovations since 2003. From 2005 to 2009, unit interiors were renovated by the prior owner. These renovations included new kitchen appliances, cabinets, countertops and interior finishes. The borrower plans to renovate the remaining 198 non-renovated units over the next three years at an estimated cost of $9,000/unit to $12,000/unit. Capital improvements completed since acquisition in 2016 total $4.0 million and include parking lot repairs, flooring replacements, new signage and clubhouse upgrades, among others. Common area amenities include a swimming pool, clubhouse, fitness center, playground, business center and dog park. The unit mix at the complex is comprised of 186 one-bedroom units (812 sf ); 430 two-bedroom units (948 sf ); and 18 three-bedroom units (1,220 sf ). The complex was 97.0% occupied as of June 2018, and has a 5.0% student tenant concentration and 5.0% military tenant concentration.

Bayshore Landing is a 158-unit, garden-style complex located 23 miles southeast of the Baltimore CBD. The complex was built in 1984 and renovated in 2011. Amenities at the property include a clubhouse, business center, fitness center and outdoor swimming pool. The borrower has completed renovations totaling $981,000 since acquiring the property in 2016. Major exterior improvements included parking lot repairs, carport renovations, pool refurbishment, landscaping and roof repairs. Interior renovations included cabinets, flooring, furniture upgrades, HVAC improvements and interior painting. The unit mix at the property is comprised of 83 one-bedroom units (622 sf ) and 75 two-bedroom units (872 sf ). The complex was 98.1% occupied as of June 2018.

SPONSORSHIPThe sponsor for this transaction has been in the multifamily real estate industry for over 30 years, has overseen the acquisition and disposition of more than $6.0 billion in assets throughout his career and currently reports ownership interests in 50 multifamily properties across the United States. The guarantor reports a combined net worth and liquidity of $112.8 million and $29.9 million, respectively. The sponsor has disclosed three prior transactions that received discounted payoffs. All three loans were with the same lender who approached the sponsor offering to discount the outstanding principal balance of each loan in exchange for immediate refinancing. The properties were located in California and the discounted payoffs occurred during the financials crisis in December 2008 and May 2009. The sponsor is a repeat Freddie Mac borrower having closed 98 loans since May 2010, all of which have performed with no delinquency. Property management for both properties will be provided by Greystar, a full-service third-party management company with 435,000 units under management nationally, 5,000 of which are located within the Baltimore MSA.




DBRS ANALYSISSITE INSPECTION – SHERWOOD CROSSINGDBRS toured the interior and exterior of the property on Friday, October 5, 2018, at approximately 11:30 a.m. Based on the site inspection, DBRS found the property quality to be Average (+).

The collateral is a 634-unit, garden-style apartment complex located in Elkridge, MD. The complex is made up of 21 three-story buildings situated across 44 acres. The subject is positioned just off Old Waterloo Road with good signage at the primary entrance and just a short drive from I-95, a major north-south thoroughfare in the area. The property benefits from good proximity to both the Baltimore and Washington, D.C. metropolitan areas, approximately 16 miles and 31 miles from each respective CBD.

The immediate neighborhood can be characterized as a mixture of single-family residential development to the north with office and industrial buildings along Route 100 and east just across the interstate. A Costco-anchored power center is conveniently located just west of the property within half a mile that offers several dining and retail outlets including a Best Buy, Aldi, Gold’s Gym International, Inc. and Trader Joe’s. Demand generators in the area include the Howard County General Hospital and Fort George G. Meade Military Reservation which are both within five miles of the subject. Per management, military concentration at the subject is fairly low with only around 5.0% exposure. Overall, the neighborhood can be described as an established area that should continue to experience modest growth over the near term with limited potential for new development given the lack of available vacant land.

The property was approximately 97.0% occupied at the time of inspection and, per management, no concessions were being offered. The improvements, which were originally constructed in 1989, have been renovated several times over the years and showed no signs of deferred maintenance. The buildings consist of wood frame structure, light-grey vinyl siding exteriors and double pane aluminum framed windows with white trim. Ground floor units feature a concrete slab patio while second and third floor units offer wooden deck balconies with white railing and banister. Interiors are comprised of beige colored drywall with white baseboard, vinyl flooring in the kitchens and bathrooms along with vinyl or carpet in the bedroom and living areas. Rooms are well-lit, featuring sliding glass doors in the main living areas and large windows that allow for an abundance of natural sunlight in both the living and sleeping areas. The open design of the living and kitchen makes the space feel larger than the actual size. Prior ownership injected $7.3 million ($11,515/unit) of capital investment into both exterior and interior repairs and improvements from 2003 to 2009. Since acquiring the property in 2016, the sponsor has continued to improve the property with various upgrades totaling an estimated $4.0 million ($6,237/unit). Since acquisition, approximately 436 units have been renovated and are achieving monthly rent premiums of $100/unit. Ownership intends to continue upgrading the remaining 198 non-renovated units over the next three years as they turnover at an estimated cost of $9,000 to $12,000 per unit. The landscaping was well-kept with manicured lawns, shrubbery that appeared to be recently trimmed and no trash or debris on the grounds. Overall, DBRS found the property to be well-maintained, in good physical conditions and free of any notable deferred maintenance. DBRS ANALYSISSITE INSPECTION – BAYSHORE LANDINGDBRS toured the interior and exterior of the property on Friday, October 5, 2018, at approximately 9:30 a.m. Based on the site inspection, DBRS found the property quality to be Average (-).

The collateral is a 158-unit, garden-style apartment complex located in Annapolis, MD. The complex is made up of seven, three-story buildings situated on just over 12 acres. Positioned just off the west side of Spa Road, the property is conveniently located within close proximity to both the Baltimore and Washington, D.C. metropolitan areas, approximately 20 miles and 25 miles from each respective CBD.




The area is generally established, with residential neighborhood development in all directions of the subject. The nearest commercial concentrations are generally clustered to the north along Spa Road and to the southwest along Forest Drive. Approximately one mile to the west of the subject along Forest Drive there are two retail centers, featuring a CVS Pharmacy, Safeway, Inc. grocery store and several other retail and restaurant tenants all within a short drive of the subject. Nearby major employers include Fort George G. Meade Military Reservation, Johns Hopkins University, Aberdeen Proving Ground and the University of Maryland Medical System. The area is generally infill with limited vacant or available land for new development and is forecasted to experience moderate growth over the near term.

The property was approximately 98.0% occupied at the time of inspection and, per management, concessions are only offered should occupancy fall below 95.0%. The improvements, which were originally constructed in 1984, were renovated by prior ownership in 2011. Since purchasing the property in April 2016, the sponsor has made $980,615 ($6,206/unit) in capital improvements to the subject. Approximately $479,000 in exterior renovations include repairs to the parking lot, picnic areas, carport and pool renovation, roof repairs, exterior paint and new signage. Interior improvements, totaling $380,000, have been made in the form of new cabinets, carpet refurbishment, interior paint, tile and flooring and carpet refurbishment. The building’s facade is composed of beige panel siding and brick masonry veneer, with multicolored aluminum accents and moldings along the exterior. DBRS noted some spalling and signs of deferred maintenance in areas throughout the parking lot. While signage out front was adequate and was accented by well-kept shrubs and flowers, the overall landscaping was lacking with leaves and dirt strewn about throughout the property along sidewalks and ground floor patios which somewhat detracted form the overall curb appeal. Interiors feature beige drywall with white crown molding and baseboards along with vinyl plank flooring throughout for 106 renovated units. The 52 non-renovated units, which currently offer vinyl tile in the kitchen and bathrooms and carpet in the living and bedroom areas, are slated to be upgraded with new vinyl flooring within the next year. Interiors are well-lit, featuring sliding glass doors in the living area and oversized bedroom windows that allow for ample natural light in both the living and sleeping areas. Amenities include a recently renovated clubhouse furnished with modern furniture and decor, car wash area, dog park, fitness center, swimming pool with an elevated deck and business center. The property also offers 64 covered parking stations available for an additional fee, which management noted is not available at competing properties. Overall, the subject interiors were on par with market as compared to similar properties, but exteriors were slightly aged in appearance and could benefit with improved landscaping to enhance curb appeal.




DBRS NCF SUMMARY

NCF ANALYSIS

2015 2016 2017 T-12 May 2018 Issuer NCF DBRS NCFNCF

Variance

GPR $13,457,834 $9,129,641 $13,903,444 $14,034,583 $14,187,109 $14,187,109 0.0%

Other Income $718,391 $523,473 $918,811 $903,111 $903,111 $903,111 0.0%

Vacancy & Concessions ($944,697) ($791,799) ($1,082,112) ($906,798) ($771,937) ($921,598) 19.4%

EGI $13,231,528 $8,861,315 $13,740,143 $14,030,896 $14,318,284 $14,168,623 -1.0%

Expenses $4,556,602 $3,199,830 $4,817,061 $4,799,675 $4,809,052 $5,020,788 4.4%

NOI $8,674,926 $5,661,485 $8,923,082 $9,231,220 $9,509,231 $9,147,835 -3.8%

Capex $0 $0 $0 $0 $186,286 $198,000 6.3%

NCF $8,674,926 $5,661,485 $8,923,082 $9,231,220 $9,322,946 $8,949,835 -4.0%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. DBRS derived separate NCFs for each property to provide thorough analysis of this loan.

The resulting DBRS NCF for Sherwood Crossing alone was $7,127,563, a variance of approximately -4.5% from the Issuer’s NCF of $7,462,970. The main drivers of the variance are operating expenses and vacancy. Operating expenses were generally based on the T-12 period ending May 2018, inflated by 3.0%. The DBRS total expense ratio is approximately 35.3%, slightly above both the Issuer’s concluded expense ratio of 33.3% and the appraiser’s assumption of 33.4%, but within the appraiser’s expense comparables, which range from 29.4% to 39.4%. DBRS utilized a vacancy factor of 6.0% to get the monthly NRI in line with the trailing six months ending June 2018.

The resulting DBRS NCF for Bayshore Landing alone was $1,822,271, a variance of approximately -2.0% from the Issuer’s NCF of $1,859,976. The main drivers of the variance are a management fee and operating expenses. DBRS applied a management fee equal to 3.0% of the EGI, which is above the appraiser’s concluded management fee of 2.25% and the actual contractual rate with a third-party affiliated management company of 2.5%. Operating expenses were generally based on the T-12 period ending May 2018 inflated by 3.0%. The DBRS total expense ratio is approximately 36.0%, slightly above both the Issuer’s concluded expense ratio of 34.9% and the appraiser’s assumption of 34.2%, but within the appraiser’s expense comparables, which range from 29.4% to 39.4%.

The combined DBRS NCF for the two properties was $8,949,835, a variance of -4.0% from the Issuer’s combined NCF of $9,322,946.

DBRS VIEWPOINTBoth Sherwood Crossing and Bayshore Landing benefit from their location within mature, established communities with good proximity to the greater Washington, D.C. and Baltimore MSAs. Further, both Sherwood Crossing and Bayshore Landing are situated within infill areas with little vacant or available land for new development and currently report strong submarket vacancy metrics by vintage of 5.0% and 4.9% per Reis, respectively. While the Bayshore Landing property was observed to be inferior to the Sherwood Crossing property, with less curb appeal and a somewhat more dated appearance, both properties benefit from capital renovation work that has taken place since the sponsor acquired both properties in April 2016, as well ongoing budgeted plans to continue renovation work as units turn over. The loan sponsor is well-capitalized with reported net worth of $112.8 million and liquidity of $29.9 million. The guarantor has over 30 years of multifamily experience with particular expertise in value-added asset management, related renovation work and specific focus on Class B multifamily rehabilitation. The loan has high going-in leverage, as evidenced by the DBRS Going-In Debt




Yield of 6.8% and Term DSCR of 1.15x. Further, according to Real Capital Analytics recent 1980’s vintage sales comparables within the Baltimore MSA have been sold since October 2016 for an average sales price of $187,511 per unit, which is just slightly above the loan’s exposure of $166,564/unit but below the combined appraised value of $225,884/unit.

DOWNSIDE RISKS• The loan is structured with a four-year IO period and exhibits meaningful refinance risk with a low DBRS Exit Debt Yield

of 7.6% and DBRS Refi DSCR of 0.82x.

STABILIZING FACTORS• The loan is backed by a well-capitalized borrower with deep experience in value-added Class B multifamily properties.

With plans to continue renovating units, there could be modest cash flow growth during the loan term. Additionally, the sponsor has closed 98 loans with Freddie Mac since May 2010, with an aggregate original principal balance of $3.3 billion, all of which have performed as agreed.



COLLATERAL SUMMARY

DBRS Property Type Multifamily Year Built 1953/1970/1989

City, State Various Physical Occupancy 77.2%

Units 1,189 Physical Occupancy Date June 2018

The three cross-collateralized loans are secured by the borrower’s fee interest in three MHC properties totaling 1,189 pads. The three properties are Sterling Estates, a 784-pad community located in Justice, IL; Norcross, a 207-pad community located in Norcross, GA; and Millennium Estates, a 198-pad community located in Las Vegas, NV. Millennium Estates was acquired by the borrower in 2014 and Nocross and Sterling Estates were both acquired in 2012. Combined loan proceeds of $63.0 million will refinance $46.4 million of existing debt as well as fund a cash equity distribution of $16.7 million to the borrower. The borrower has no cash equity remaining in Norcross or Sterling Estates and $108,000 of cash equity remaining in Millennium Estates. The ten-year loan is IO for the first three years and amortizes over a 30-year schedule thereafter.

Various, Various

Loan SnapshotSeller



$63.0Loan psf/Unit



September 2028Amortization


1.18xDBRS Refi DSCR



8.1%

Competitive SetMHC, Large, Suburban

Median Debt Yield9.8%

Median Loan PSF/Unit$27,376

Debt Stack ($ million)Trust Balance

$63.0Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$63.0



(Distribution) ($ million)($16.7)

Sterling Estates, Norcross and Millenium Estates



STERLING ESTATES, NORCROSS AND MILLENIUM ESTATES – VARIOUS, VARIOUS

PORTFOLIO SUMMARY

Property City, State Units Year BuiltCut-Off Date Loan Amount

% of Cut-Off Date Loan Amount Occupancy

Sterling Estates Justice, IL 784 1953 $41,323,000 65.6% 71.1%

Norcross Norcross, GA 207 1970 $11,440,000 18.2% 99.5%

Millennium Estates Las Vegas, NV 198 1989 $10,192,000 16.2% 77.8%

Total/Wtd. Avg. Various 1189 Various $62,955,000 100.0% 77.2%

Sterling Estates is a 784-pad community located in Justice, IL, approximately 20 miles southwest of the Chicago CBD. The 80.7-acre site was developed in phases from the mid-1950s to the late 1970s. Most recently, the clubhouse was constructed in 2005. Of the 784 pads, 431 (55% of total pads) are single-section and 353 (45% of total pads) are multi-sections sites. Residents can install a single-section home on a multi-section site. Two hundred and seventy-four (34.9%) homes are owned by a borrower affiliate, which is a very high figure and of those, 228 (83.2%) are occupied. The community was 71.1% occupied as of June 2018. The community’s common area amenities include a clubhouse, fitness center and playground. Recent improvements at the property include asphalt repairs, landscaping upgrades, plumbing upgrades, fence replacement and a new clubhouse furnace. In addition, the borrower plans to invest $114,875 in capital improvements for asphalt repairs over the next 12 months. This property was securitized in the BACM 2003-2 transaction with an original balance of $40.5 million. The loan was transferred to the Special Servicer in 2009, and was ultimately resolved at a $7.5 million loss to the trust.

Norcross is a 207-pad community located in Norcross, GA, approximately 24 miles northeast of the Atlanta CBD. The property was built in 1980, and improvements consist of 207 pads, a maintenance building/garage, mail center, pool building, five sheds and a single-family home used exclusively for storage. The borrower has invested $557,745 in capital improvements since 2012, including landscaping improvements, new playground equipment, signage, pool upgrades and parking lot and sidewalk repairs. Of the 207 pads, 155 are single-section (74.9% of total pads) and 52 are multi-section sites (25.1% of total pads). Only seven homes are owned by a borrower-affiliate. The property was 99.5% occupied as of June 2018.

Millennium Estates is a 198-pad community located in Las Vegas, NV, a few miles northeast of downtown Las Vegas. The property was 77.8% occupied as of June 2018. The immediate area surrounding the property consists predominately of residential housing developments. The property was built in 1989, and over the last three years approximately $236, 210 has been invested in capital improvements at the property including upgrades to the property’s plumbing and gas service, landscaping, clubhouse, pool and exterior painting/stucco. The property’s 198 pads are all multi-sections sites and there are a substantial 87 (43.9%) borrower-affiliate owned homes at the property. Common area amenities include a single-story clubhouse building, outdoor swimming pool and playground.

SPONSORSHIPThe guarantor for this transaction is the founder and CEO of an accomplished real estate investment firm specializing in the acquisition and professional management of manufactured home communities. The firm owns and manages 235 communities spanning 24 states. The guarantor disclosed three foreclosures that took place between 2003 and 2006. The foreclosures involved multifamily properties in Michigan submarkets that were affected by severe job losses. Freddie Mac foreclosed on two of the properties and Fannie Mae foreclosed on the third. Property management for all three properties will be provided by a borrower-related management company.




DBRS ANALYSISSITE INSPECTION SUMMARY – STERLING ESTATESDBRS toured the interior and exterior of the property on Tuesday, October 9, 2018, at 9:30 a.m. Based on the site inspection DBRS found the property quality to be Average.

The collateral consists of a 784-pad manufactured housing community located in Justice, approximately 20 miles southwest of the Chicago CBD. Primary access to the community is provided by I-294, which lies directly south of the property and Route 45, which runs west of the property and provides access to I-55. The commute to downtown Chicago is approximately a 30-minute drive. Land use directly surrounding the property consists of single-family homes to the east, vacant land to the west and north and I-294 to the south. The property’s regional manager noted a few other MHCs in the surrounding area, including Chief Mobile Home Park and LaGrange Estates, but stated that Sterling Estates is larger and provides amenities far superior to its competitors.

The exterior of the property has adequate signage and welcoming curb appeal. The large clubhouse is finished with lodge-style decor and houses the management office, fitness center and a large gathering room for tenant use. The community hosts events at the clubhouse such as Mother’s Day and Father’s Day events and tenants can also reserve the clubhouse’s general space for personal gatherings. The property has a playground that appeared to be in good condition. The property comprises single-section and multi-section sites, as well as 274 homes owned by a borrower affiliate. The interior of one borrower-owned home featured wood-style laminate flooring and neutral wall coverings. The kitchen was finished with dark cabinets and black appliances. Bedrooms in the home were ample in size, with sufficient closet space. While touring the property there was considerable construction work being done on the foundations of empty pads. To conform with new regulations, concrete foundations are now required to have pillars extending four feet into the ground. According to the regional manager, the foundation work costs $8,000 to $10,000 per pad and the expense is absorbed by the borrower. The age and condition of homes varied greatly at the property. Many of the newer homes were in pristine condition, while some older homes appeared to be in need of great repair. Overall, DBRS found the property to be well-maintained at the time of inspection with above-average amenities for the property type.

SITE INSPECTION SUMMARY – NORCROSSDBRS toured the interior and exterior of the property on Tuesday, October 9, 2018, at 9:30 a.m. Based on the site inspection and management tour, DBRS found the property quality to be Average.

The subject property is located in Norcross, 24.4 miles northeast of the Atlanta CBD. The narrow lot is 42.3 acres and bordered to the west by a variety of retail shops, including a grocery store and gas station and bordered to the east by Pull-A-Part, LLC, a used car part shop with a large parking lot full of partially torn down cars. The immediate area is single-family residential to the south and industrial properties to the north. Entrance to the property sits near the corner of U.S. Route 23 and Simpson Circle. U.S. Route 23 is a highway running perpendicular to I-85 leading southwest to Atlanta and is a major industrial corridor. Access to I-85 is approximately four miles south.

The entrance to the property is located adjacent to a gas station with adequate signage. Upon entering, there is a sponsor-owned single-section home next to another single-section home used as the leasing office. Both the exterior and interior of the leasing office appeared fairly dated and not attractive. The maintenance shed is also located next to the leasing office. The subject consists of 207 pads, each having two parking spaces per pad. At the time of inspection, management noted that all pads were occupied. Seven of the homes are owned by a sponsor-affiliate and rented on one-year lease terms. The property appeared in fair condition, with occupants having fairly well-kept and orderly pad sites. Common area amenities include a pool, playground, gazebo and basketball court, all of which were noted by management to be used on a frequent basis by occupants. Common areas appeared well maintained with limited signs of deferred maintenance. A large portion of the road had been recently repaved at the time of inspection and the remaining portion appeared in average condition. The property would benefit from an overhaul of the landscaping throughout the property grounds.




SITE INSPECTION SUMMARY – MILLENNIUM ESTATESBased on the DBRS site inspection and management meeting conducted on Thursday, October 4, 2018, at 11:30 a.m., DBRS found the property quality to be Average.

The subject is located along North Lamb Boulevard, approximately five miles east of the Las Vegas CBD and ten miles northeast of the Las Vegas Strip. The property has limited visibility from North Lamb Boulevard with only one point of ingress and egress, however, the property has visible signage and attractive landscaping on display along the entrance, welcoming residents. The local area is suburban in nature and relatively infill, with limited vacant land available for development. The immediate area development is primarily residential in nature with some retail presence along main thoroughfares. Residential uses include other MHC communities, garden-style apartment complexes and single-family homes, most of which are in similar vintage and condition as the subject. Area retailers include CVS Pharmacy, Family Dollar and Walgreens, as well as local grocery stores, shops and restaurants. Other area demand drivers include the Desert Pines High School, Mountain View Christian School and Oran K. Gragson Elementary School.

The property features a medium height grey brick wall and fencing surrounding the perimeter for security purposes, however, management did not report security to be a problem at the subject. Roads were well maintained, with some cracking observed due to regular wear and tear. The subject clubhouse and leasing office are located near the entrance of the community. The clubhouse houses the community’s amenities, which include a billiards room, business center, common laundry, children’s play area, barbecue grilling area and one pool and spa. The common area amenities were well maintained and in good condition, however, dated in appearance given its construction in 1989, without a major renovation since then. The age and condition of homes varied by style and vintage, however, generally appeared to be in good condition. According to management, the majority of the residents are comprised of blue-collar, working class families, working in construction, tourism and gaming sectors. Community events and social gatherings, such as root beer happy hours and luaus, are held periodically by management to create a sense community amongst residents.

DBRS toured two new homes at the time of the site inspection, a two-bedroom and a three-bedroom home. The homes were in good condition and featured black appliances, faux-granite countertops, vinyl flooring and wood cabinetry. Management indicated that older homes would feature significantly dated interiors, which at turnover would most likely be replaced by a new home. Management noted El Adobe, located across the street, to be one of their biggest competitors based on its proximate location. Items on management’s wish list includes children’s playground upgrades, repairs to the irrigation system and upgraded lighting. Overall, the property appeared to be well maintained.




DBRS NCF SUMMARY

NCF ANALYSIS


Variance

GPR $10,404,994 $10,600,723 $10,888,607 $11,020,253 $11,193,228 $11,193,228 0.0%

Other Income $904,363 $881,707 $907,709 $910,110 $910,110 $910,110 0.0%

Vacancy & Concessions ($3,759,015) ($3,625,937) ($3,389,277) ($3,447,855) ($3,511,619) ($3,624,233) 3.2%

EGI $7,550,342 $7,856,493 $8,407,039 $8,482,508 $8,591,719 $8,479,105 -1.3%

Expenses $3,360,637 $3,412,924 $3,467,087 $3,719,184 $3,774,433 $3,959,982 4.9%

NOI $4,189,705 $4,443,569 $4,939,952 $4,763,324 $4,817,285 $4,519,124 -6.2%

Capex $9,900 $9,900 $9,900 $9,900 $59,450 $59,450 0.0%

NCF $4,179,805 $4,433,669 $4,930,052 $4,753,424 $4,757,835 $4,459,674 -6.3%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $4,459,674, a variance of -6.3% from the Issuer’s NCF. The main drivers of the variance are management fee expense, economic vacancy and operating expenses. DBRS applied a 5% management fee for all three properties. The Issuer applied a 4% management fee expense for Norcross and Millennium Estates and a 3% management fee expense for Sterling Estates. DBRS EGI was based on the T-12 ending May 2018 NRI for Sterling Estates and Millennium Estates. DBRS EGI for Norcross was slightly below the T-12 figure as Norcross is near full occupancy and a minimum 5% vacancy figure was used. The final variance driver is operating expenses. DBRS operating expenses were based on the T-12 figure inflated by 3%. A similar approach was taken by the Issuer for Norcross and Millennium Estates, however uninflated T-12 figures were used by the Issuer for Sterling Estates.

DBRS VIEWPOINTThe collateral properties are each located in major MSAs – Chicago, Atlanta and Las Vegas – that have substantial populations and economies. Each property is located within close proximity to major thoroughfares leading from the community to the respective CBD allowing for manageable commutes from the communities to primary employment centers. The stable Chicago market is expected to generate roughly 36,400 new jobs in 2018, with construction expected to play a prominent role in the economy over the near term. Atlanta is currently one of the fastest growing cities in the United States and is attracting major company headquarters and expansions. The Las Vegas market anticipates growth in the near-term future including an increased number of projects expected for the Strip and accelerated job growth. The communities provide affordable or comparable housing options compared to single-family homes within the submarkets. Sterling Estates represents an affordable option for those seeking housing in the Chicago submarket with the property’s average rent of $864 per pad being significantly less than the average monthly obligation for a single-family home in the submarket at $1,540. The cost for a manufactured home at Sterling Estates is also less than the appraiser’s estimate for a two-bedroom apartment unit in the submarket of between $1,045 and $1,885 per month. Similarly to Sterling Estates, Norcross represents affordable housing within its respective MSA. The average rental rate at the property, $577, is significantly less than monthly obligation for a single-family home in the submarket at $1,332. Unlike Norcross and Sterling Estates, Millennium Estates does not represent a significantly more affordable housing option compared to single-family homeownership. The average monthly rent at Millennium Estates of $686 is only slightly less than the total monthly obligation for a single-family home in the Northeast Las Vegas submarket at $697. In addition to desirable locations and affordability, the properties are managed by a prominent owner and operator of MHCs. The firm has extensive experience within the MHC sector with over 60,000 pads in 24 states currently under their management. Refinance risk is considered somewhat elevated as evidenced by the relatively DBRS Refi DSCR and DBRS Exit Debt Yield of 0.82x and 8.1%, respectively.




DOWNSIDE RISKS• The borrower cashed out approximately $16.7 million as part of this transaction and has $108,000 of total cash equity

remaining in the transaction.

• The properties were constructed in 1953, 1970 and 1989, respectively.

STABILIZING FACTORS• The borrower purchased two of the properties in 2012, one in 2014, and has extensive manufactured housing experience.

Since acquisition, the borrower has spent approximately $766,000 on capital improvements across the three properties demonstrating their commitment to the investments. Millennium Estates and Sterling Estates have each experienced robust occupancy growth since acquisition and were achieving occupancies of 77.8% and 71.1% as of June 2018. Norcross has continued its strong occupancy metrics with vacancy at the property ranging from 1.0% to 2.0% over the past three years.

• Despite their age, the engineering reports noted minimal priority repairs for the properties. Capital improvements have been completed recently at each property and monthly replacement reserves are required.



COLLATERAL SUMMARY

DBRS Property Type Multifamily Year Built/Renovated 2012

City, State Alexandria, VA Physical Occupancy 94.8%


This loan is secured by the borrower’s fee interest in The Beacon at Groveton, a 290-unit mid-rise apartment complex located 11.6 miles south of Downtown Washington, D.C. in Alexandria, Virginia. Originally constructed in 2012, the collateral features two eight-story buildings and was 94.8% occupied per the June 2018 rent roll. The collateral additionally features 9,723 sf of ground-floor retail space divided among three storefront spaces, which were 100.0% leased as of June 2018 with lease expirations for 4,464 sf (45.9% of total commercial NRA), 2,618 sf (26.9% of total NRA) and 2,641 sf (27.2% of total NRA) scheduled to occur in January 2026, October 2027 and February 2028, respectively. Income generated from the ground-floor space represented approximately 4.9% of total DBRS EGI. Loan proceeds of $55.0 million in addition to a borrower equity contribution of nearly $1.1 million refinanced approximately $56.3 million of existing debt on the property. The ten-year fixed-rate loan is structured with a seven-year initial IO period and amortizes on a 30-year basis thereafter. As of loan closing, the borrower retained nearly $14.7 million of cash equity in the transaction.

The borrower acquired the collateral in March 2016 for a reported purchase price of nearly $70.2 million ($241,897/unit). Since acquisition, the collateral’s vacancy has ranged from 5.9% to 11.8% with occupancy improving from mid-80.0% at acquisition to 94.8% as of June 2018. The subject’s unit breakdown consists of 26 studio units averaging 540 sf, 154 one-bedroom units averaging 718 sf and 110 two-bedroom units averaging 1,085 sf. Per the June 2018 rent roll, the subject’s studio, one-bedroom and two-bedroom units achieve average monthly rental rates of $1,519, $1,650 and $2,082 per unit, respectively. The collateral’s amenities include a saltwater swimming pool, a spa, a fitness center, a business center, a grilling area, a dog park, a parking garage, WiFi throughout all common areas, 24-hour dry cleaning lockers, a guest suite available for resident guests and four different lounge areas, including a home theater

Alexandria, VAThe Beacon Of Groveton

Loan SnapshotSeller



$55.5Loan psf/Unit





1.21xDBRS Refi DSCR



7.4%

Competitive SetMultifamily, Large, VA,



$51,347


$55.5Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$55.5






THE BEACON OF GROVETON – ALEXANDRIA, VA

(Beacon House Theatre), a coffee lounge (The Hangar), a poker/game room with a pool table and shuffle board (Beacon Sky Club) and a video gaming room (The Simulator). The property additionally offers complimentary shuttle service to the Huntington Metro station and features 367 parking spaces, an aggregate parking ratio of nearly 1.3 spaces per unit. Unit amenities include kitchens equipped with granite countertops and black appliances, tile backsplashes, hardwood-style flooring, ceiling fans, double shower heads and washer/dryer units. Select units also feature kitchen islands.

COMPETITIVE SET

Property LocationDistance

from Subject UnitsYear Built/ Renovated Occupancy

The Shelby Alexandria, VA 1.0 miles 240 2014 96.0%

Courts at Huntington Station Alexandria, VA 1.6 miles 404 2011 99.0%

Parker at Huntington Metro Alexandria, VA 2.3 miles 360 2016 98.0%

800 Carlyle Alexandria, VA 3.4 miles 280 2010 97.0%

Post Carlyle Square Alexandria, VA 3.5 miles 205 2007 97.0%

The Beacon at Groveton Alexandria, VA n/a 290 2012 94.1%

Source: Appraisal.

The appraisal identified five multifamily properties within the local market that compete with the subject, all of which are of similar vintage to the collateral. All competitive properties identified by the appraisal had strong occupancy figures ranging from 96.0% to 98.0%. Per Reis, 234 units are forecasted to be constructed and 160 units absorbed annually across the collateral’s southeast Fairfax County submarket over the five-year period ending December 2022, a construction/absorption ratio of 1.5 compared to the construction/absorption ratio of 2.1 reported for the five-year period ending December 2017. Inventory growth averaged 0.9% annually across the collateral’s submarket for the five-year period ending December 2017 and is forecasted to average 1.4% annually over the five-year period ending December 2022. Comparatively, inventory growth across the greater Suburban Virginia MSA averaged 2.2% annually over the five-year period ending December 2017 and is forecasted to average 1.7% annually over the five-year period ending December 2022. Reis further reported an average submarket vacancy rate of 4.6% as of Q2 2018, though the average vacancy rate for properties constructed after 2009 was 7.2%.

SPONSORSHIPThe sponsor and non-recourse carveout guarantor for this transaction is a San Francisco-based owner and operator of investment-grade commercial real estate with reported ownership interests in 46 multifamily properties totaling 11,186 units and four retail properties located across nine states as of June 2017. The sponsor/guarantor is also a repeat Freddie Mac borrower, having closed 16 loans totaling approximately $445.0 million since 2021. Per the financial statement dated April 2018, the guarantor reported a total net worth and liquidity of $118.6 million and $8.6 million, respectively, adequate net worth and liquidity multiples of 2.1x and 0.2x, respectively.

The property is managed by Bozzuto Management Company, a third-party management entity, for a contractual fee of 2.75% EGI. As of June 2018, Bozzuto Management Company’s management portfolio included 240 multifamily properties totaling 68,000 units, inclusive of 3,991 units located across the Alexandria, Virginia area.




DBRS ANALYSISSITE INSPECTION SUMMARYBased on the DBRS site inspection and management meeting conducted Thursday, October 4, 2018, at approximately 4:00 p.m., DBRS found the property quality to be Average (+).

The property is located directly off Richmond Highway, a major north-south thoroughfare, in the Groveton area of Alexandria, approximately 3.5 miles south of the CBD and 11.6 miles south of the Washington, D.C. CBD. The area can be characterized as a mostly built-out, established neighborhood that is undergoing revitalization as older, under-utilized properties are being redeveloped into newer properties. Single-family residential neighborhoods represent the majority of development on both the east and west sides of the subject while various commercial development is present along Richmond Highway to the north and south. To the immediate north of the subject is the Beacon Center, a large anchored shopping center with tenants including Giant Foods, Lowe’s Home Improvement, Marshall’s, HomeGoods and several outparcels occupied by restaurant and bank tenants. Further, a Super Walmart anchored center is located within one mile to the north. Access to the property is good as both I-495 and I-395 are within four miles of the subject.

The asset, constructed in 2012, is made up of two mid-rise buildings standing eight stories in height containing a total of 290 apartment units. Additionally, the collateral includes 9,723 sf of ground-floor retail space that is fully leased to three tenants and has excellent frontage along the Richmond Highway. The collateral includes a six-story parking garage offering 505 parking spaces that can be leased to residents as reserved spaces for $75 per month or non-reserved spaces for $50 per month. The property has a prominent corner location along the heavily trafficked Richmond Highway and exhibits excellent visibility to passersby, although signage is somewhat small. Building exteriors are comprised of a combination of dark brick, vinyl and stucco facade. Ingress and egress to the surface parking lot is provided from either direction along Groveton Street or from the southbound lane along Richmond Highway. Residents can access the parking garage through the surface parking lot or a separate entrance further west along Groveton Street. There is a large courtyard area at the interior of the property where amenities such as the saltwater swimming pool, new stainless barbecue grilling stations, outdoor lounge chairs and fire pits are located. DBRS noted this design created a more relaxed environment, helping to insulate the outdoor common space away from the noise and bustle of Richmond Highway traffic. Other amenities include an updated game room and lounge area, a business center, dry cleaning lockers, a theatre room, a spa, an expansive fitness center with several exercise machines and complimentary shuttle service to the Huntington Metro station.

The property was approximately 94.1% occupied at the time of inspection, which is in line with the submarket. DBRS toured the one-bedroom model unit as well as vacant one-bedroom and two-bedroom units at the property. The model units are furnished, well decorated and show very well for potential residents. Unit sizes are in line with the average




size at competing properties, although with 154 of 290 total units, the subject unit mix is heavily weighted toward one-bedroom units. All units were spacious and offered an abundance of natural light with beige walls featuring medium-brown crown molding and baseboards. The kitchens inspected were outfitted with black appliances, granite countertops, tile backsplashes and dark wood cabinets. DBRS noted ample countertop space with select units featuring sizeable kitchen islands. Flooring primarily consisted of vinyl planking in the bathrooms and kitchens and a mixture of carpet or vinyl in the living areas. Bedrooms were of average size, featuring walk-in closets and large bathrooms with a separate tub and stand-up shower. Certain units house stackable washer/dryer units within the bathroom while others are located just off the kitchen. The grounds of the subject property were clear of any trash or debris, attractively landscaped and in very good condition.

DBRS NCF SUMMARY

NCF ANALYSIS

2017 T-12 May 2018 Budget Issuer NCF DBRS NCFNCF

Variance

GPR $6,208,610 $6,251,082 $6,337,555 $6,272,407 $6,272,407 0.0%

Other Income $696,896 $763,437 $835,906 $881,225 $876,848 -0.5%

Vacancy & Concessions ($600,169) ($577,910) ($463,214) ($570,943) ($628,026) 10.0%

EGI $6,305,337 $6,436,609 $6,710,247 $6,582,689 $6,521,229 -0.9%

Expenses $2,437,402 $2,435,334 $2,511,683 $2,506,669 $2,563,890 2.3%

NOI $3,867,935 $4,001,275 $4,198,564 $4,076,020 $3,957,339 -2.9%

Capex $129,194 $220,555 $565,645 $58,000 $72,500 25.0%

NCF $3,738,741 $3,780,720 $3,632,919 $4,018,020 $3,884,839 -3.3%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $3,884,839, a minimal -3.3% variance from the Issuer’s NCF of $4,018,020. The primary drivers of the variance included vacancy and expenses. DBRS estimates a 9.6% economic vacancy loss on the property, which resulted in a residential NRI in line with that of the T-12 period ending May 2018. By comparison, the Issuer estimated a 8.9% economic vacancy loss on the property. The DBRS-estimated vacancy loss is further supported by reported economic vacancy losses of 9.7% and 9.2% reported for 2017 and the T-12 period ending May 2018, respectively. DBRS set operating and fixed expenses to the T-12 inflated by 3.0%, while the Issuer estimated operating and fixed expenses at the property based on the T-12 exclusive of inflation. DBRS VIEWPOINTThe collateral is located within an established area on the south side of Alexandria that benefits from convenient access to major highways and thoroughfares as well as being just a 25-minute drive south of substantial demand drivers in Washington, D.C. The neighborhood is undergoing considerable revitalization as older, more obsolete properties are being redeveloped into new residential and commercial buildings. Per Reis, 248 new apartments units were completed in 2017 and an additional 1,172 units are expected to be delivered through 2022 within the Southeast Fairfax County submarket. While there has been new construction recently, which is forecasted to continue over the coming years, the majority of new development to date is occurring to the north of the subject around the Huntington Metrorail station. At $96,659, the household income within a three-mile radius of the subject is well above the national average but below the overall Fairfax County figure of $111,963. While the subject has performed at below market occupancy over the last two and a half years, the sponsor has pushed occupancy from around 85% to 94.8%% since acquiring the subject in March 2016. Furthermore, a recent transportation and land-use plan was approved in March 2018. The plan backs approximately 15.0 million sf of new development and transit systems along the Richmond Highway, which includes a new metro station within a few




blocks of the subject. Given the subject’s excellent physical condition, extensive amenity offering and ideal location in a growing submarket with easy access to shopping amenities, employment centers and the greater Washington, D.C. area, the subject should continue to perform well over the medium term.

DOWNSIDE RISKS• The loan is IO for the first seven years of the loan term with elevated refinance risk exhibited by a low DBRS Exit Debt

Yield of 7.4%.

STABILIZING FACTORS• According to Real Capital Analytics, seven mid-rise multifamily developments built within the last ten years and within

five miles of the subject have sold since February 2016, averaging a sales price of $311,089 per unit, which is 62.6% higher than the loan’s exposure of $191,370 per unit. Moreover, this transaction represents a cash-in refinancing where the sponsor contributed an additional $1.1 million in fresh equity and will maintain $14.7 million of equity in the deal at closing.

• The recent news regarding an approved land use and transportation plan to support 15.0 million sf in new transit systems and development along the Richmond Highway, which includes a metro station near the subject, should enhance growth within the submarket and bolster the economic outlook of the subject.



COLLATERAL SUMMARY

DBRS Property Type Multifamily Year Built/Renovated 1986/2016

City, State Lakewood, CO Physical Occupancy 96.7%


This loan is secured by the borrower’s fee interest in St. Moritz Apartment Homes, a 360-unit garden-style multifamily development located approximately eight miles west of Downtown Denver in Lakewood, Colorado. Originally constructed in 1986 and last renovated in 2016, the collateral features 18 three-story buildings and was 96.7% occupied per the June 2018 rent roll. Loan proceeds of $55.0 million in addition to a borrower cash equity contribution of $23.0 million financed the $78.0 million acquisition, funded $87,000 of initial reserves and covered closing costs associated with the transaction. The property was previously securitized in the FREMF 2013-K25 transaction with an original balance of $32.0 million and was defeased in August 2018. The ten-year fixed-rate loan is full-term IO.

The collateral benefited from $2.3 million ($6,515/unit) in capital investment by the seller in 2016, which financed interior renovations, paint, landscaping, building upgrades, appliance replacement, flooring upgrades, pavement repairs, clubhouse renovation work, new signage, pool repairs, office renovation work and door/blind replacement. Between the seller and the previous owner, a total of 287 units benefited from renovation work between 2013 and 2016 and achieve monthly rental premiums of $100 to $200. The transaction sponsor intends to invest an additional $750,000 ($2,083/unit) in capital improvements across the property, including parking lot repairs, landscaping upgrades and amenity upgrades. The subject’s unit breakdown consists of 180 one-bedroom units averaging 719 sf and 180 two-bedroom units averaging 1,007 sf. Per the June 2018 rent roll, the subject’s one- and two-bedroom units rent for an average monthly rate of $1,207/unit and $1,444/unit, respectively. The collateral’s amenities include a swimming pool, a spa, a fitness center, a clubhouse, a business center, a grill area, a basketball court, a putting green, a dog park, a laundry facility and gas fire pits. The property additionally features 637 parking spaces, an aggregate

Lakewood, COSt. Moritz Apartment Homes

Loan SnapshotSeller



$55.0Loan psf/Unit




Interest OnlyDBRS Term DSCR

1.70xDBRS Refi DSCR



7.4%

Competitive SetMultifamily, Large, 802




$55.0Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$55.0

Loan PurposeAcquisition





ST. MORITZ APARTMENT HOMES – LAKEWOOD, CO

parking ratio of nearly 1.8 spaces per unit. Apartment units feature fully equipped kitchens, and select units additionally feature wood-burning fireplaces, vaulted ceilings, washer/dryer units, patio/balcony areas and/or mountain views.

COMPETITIVE SET

Property LocationDistance from

Subject UnitsYear

Built/Renovated Occupancy

Westhills Apartments Lakewood, CO 1.6 miles 400 1972/2016 97.0%

Americana Apartments Lakewood, CO 2.0 miles 444 1985/2016 98.0%

Silver Reef Apartments Lakewood, CO 2.0 miles 419 1984/2012 98.0%

Concordia Apartments Lakewood, CO 3.0 miles 168 1985/2015 96.0%

Sloan's Lake Apartments Lakewood, CO 3.0 miles 192 1985/2016 97.0%

Avery Belmar Lakewood, CO 4.0 miles 198 1985/2015 91.0%

St. Moritz Apartment Homes Lakewood, CO n/a 360 1986/2016 96.7%

Source: Appraisal.

The appraiser identified six multifamily properties within the local market that compete with the subject, all of which are of similar if not older vintage than the collateral. All competitive properties identified by the appraisal boasted strong occupancy figures ranging from 91.0% to 98.0%. Per the appraisal, the collateral’s Lakewood North submarket has benefited from historically strong occupancy rates due to relatively limited construction and new supply delivery compared with the greater Denver MSA between 2014 and 2018. Per Reis, 215 units are forecasted to be constructed and 217 units absorbed over the five-year period ending December 2022, a construction/absorption ration of 1.0 compared with the Denver MSA forecasted ratio of 1.1 over the same period. Inventory growth averaged 2.6% across the submarket throughout the five-year period ending December 2017 and is projected to average 3.6% annually over the five-year period ending December 2022 compared with the Denver MSA forecasted average of 2.3% annually over the same period. Reis further reported an average submarket vacancy rate of 8.7% as of Q2 2018, though the figure is skewed upward by the 17.6% vacancy rate reported for properties in the submarket constructed after 2009 as evidenced by the Reis submarket vacancy of 4.4% for properties built between 1980 and 1989.

SPONSORSHIPThe borrowing entity for this transaction is a TIC comprised of a 94.0% owner and a 6.0% owner and backed by five sponsors and four guarantors. The transaction’s four guarantors reported extensive prior real estate experience and a combined net worth and liquidity of $115.5 million and $25.3 million, respectively. The guarantors maintain controlling interests in both controlling interest in each TIC, with day-to-day operations managed by a privately held real estate investment and development firm that specialized in multifamily communities.

The property is managed by BLDG II Management Co., LLC, a third-party management company, for a contractual rate equal to 2.5% of EGI. BLDG II Management Co. reported management interests in 12 multifamily properties totaling nearly 5,000 units in Colorado, all located in the local Denver area.




DBRS ANALYSISSITE INSPECTION SUMMARYDBRS toured the interior and exterior of the property on Friday, October 5, 2018, at approximately 1:30 p.m. Based on the site inspection, DBRS found the property quality to be Average.

The collateral consists of a 360-unit garden-style multifamily development located 7.6 miles west of Downtown Denver in Lakewood, Colorado. The property is situated along Robb Street, which serves as a secondary access road between West 20th Avenue to the north and West Colfax Avenue to the south. West Colfax Avenue serves as a primary east-west commercial and retail corridor to the region and provides transit between the collateral and the Downtown Denver area. West Colfax Avenue also provides access to the Colorado Mills Mall 2.8 miles southwest. The collateral’s immediate surrounding area is predominantly residential in nature, mostly comprised of several additional multifamily communities of similar vintage but lesser exterior curb appeal than the subject. The property additionally benefits from proximity to a King Soopers grocery-anchored retail center, which is located directly adjacent to the south but featured several vacancies at the time of DBRS inspection.

Per management, the collateral was approximately 95.8% occupied and 96.7% leased at the time of DBRS inspection, with concessions offered in the form of $200 move-in credits. At the time of DBRS inspection, the property was achieving historically high rents, with additional rent bumps of $50 to $75 occurring at lease renewal. Per management, the collateral’s primary market competitors included Silver Reef, West Hills, Ascend at Red Rocks, Elevate and Sloan Lakes, though the collateral benefits from generally larger unit sizes. Management further indicated that while the submarket had experienced a significant influx of new supply throughout the past decade, it was non-competitive with the collateral given the differentiation in vintage and price-point.

Originally constructed in 1986, the collateral is comprised of 18 three-story buildings featuring grey-brick exteriors accentuated by dark-blue wood paneling and white trim with pitched shingle roofs. The collateral features a centrally located on-site leasing office, with appealing vinyl wood flooring, a kitchenette, a business center and a small but adequate fitness center area with evidently updated equipment. The leasing office additionally features an outdoor pool and putting green area with various outdoor picnic table arrangements. Per management, the prior two property owners renovated a total of 287 units between 2009 and 2016, though renovated units were relatively indistinguishable from non-renovated units at the time of DBRS inspection as both non-renovated units and units renovated in 2013 featured more modern black/steel appliances while units renovated between 2014 and 2018 featured more dated white kitchen appliances. Per management, the sponsor for this transaction indicated that the remaining 73 non-renovated units would remain unrenovated. All units featured worn carpeted floors throughout the bedroom and common areas, with vinyl




wood-floored kitchens and faux-granite countertops. The community’s exterior was nicely accentuated by an abundance of mature and generally well-maintained landscaping, though moderate cracking was noted throughout most parking areas. Overall, DBRS found the property to be moderately appealing for its vintage and generally well-maintained at the time of inspection.

DBRS NCF SUMMARY

NCF ANALYSIS

2015 2016 2017 T-12 June 2018 Issuer NCF DBRS NCFNCF

Variance

GPR $4,691,959 $5,155,928 $5,529,276 $5,658,950 $5,726,124 $5,726,124 0.0%

Other Income $465,871 $483,335 $496,450 $532,701 $532,701 $499,000 -6.3%

Vacancy & Concessions ($180,262) ($280,291) ($347,171) ($346,343) ($299,251) ($400,829) 33.9%

EGI $4,977,568 $5,358,972 $5,678,555 $5,845,308 $5,959,573 $5,824,295 -2.3%

Expenses $1,492,883 $1,607,518 $1,575,797 $1,644,339 $1,627,272 $1,664,916 2.3%

NOI $3,484,685 $3,751,455 $4,102,758 $4,200,969 $4,332,302 $4,159,379 -4.0%

Capex $0 $0 $0 $0 $81,000 $90,000 11.1%

NCF $3,484,685 $3,751,455 $4,102,758 $4,200,969 $4,251,302 $4,069,379 -4.3%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $4,069,379, a -4.3% variance from the Issuer’s NCF of $4,251,302. The primary drivers of the variance included vacancy, other income and management fees. DBRS estimated a 7.0% economic vacancy loss on the property, which was generally in line with the average economic vacancy loss exhibited over the T-6 and T-9 periods ending June 2018. By comparison, the Issuer estimated a 5.2% economic vacancy loss, which was less conservative than the economic vacancy loss of nearly 6.2% reported for the T-12 period ending June 2018 but generally in line with the historical average economic vacancy loss of 5.2% reported for years 2015, 2016 and 2017. Per the historical operating statements provided, economic vacancy at the property increased approximately 2.4% between 2015 and 2017. DBRS set other income to the appraisal, which was generally in line with the historical average compared with the Issuer’s T-12 based assumptions. DBRS further applied management fees equal to 3.0% of EGI compared with the Issuer’s utilized 2.5%. DBRS VIEWPOINTThe property is well located within a growing suburban submarket of Denver and benefits from proximity to several nearby amenities/demand drivers, including West Colfax Avenue, I-70, Colorado School of Mines, the Federal Center and the Colorado Mills Mall. While inventory growth across the submarket is anticipated to grow, as evidenced by a Reis-reported average annual inventory growth rate of 3.6% for the five-year period ending 2022 compared with the average annual inventory growth rate of 2.6% exhibited over the five-year period ending December 2017, management indicated that the collateral does not compete directly with new supply and that as of October 2018, average monthly rents at the collateral were the highest achieved throughout the manager’s approximately ten-year tenure. Per Reis, monthly rents of properties constructed after 2009 across the collateral’s submarket averaged $1,679 compared with the DBRS-concluded average monthly rent per unit of $1,325 for the subject. Furthermore, though the collateral was originally constructed in 1986 and of relatively dated vintage, it exhibited similar curb appeal to surrounding multifamily properties at the time of DBRS inspection and, per Reis, was representative of the submarket with 42.0% of submarket inventory constructed between 1980 and 1989. The loan exhibits relatively low term default risk based on a high DBRS Term DSCR of 1.70x, with such DSCR driven higher by the IO nature of the loan.




DOWNSIDE RISKS• The loan is full-term IO and exhibits moderate refinance risk, as evidenced by a relatively low DBRS Exit Debt Yield and

DBRS Refi DSCR of 7.4% and 0.80x, respectively.

• Loan proceeds of $55.0 million represent a 71.9% increase over the 2013 loan proceeds of $32.0 million. Over the same time, the appraised value has increased by 97.0%.

STABILIZING FACTORS• The borrower contributed $23.0 million of cash equity to the transaction at loan closing, and the subject is located in a

rapidly growing MSA that is very attractive to institutional investors.

• Since the 2013 securitization, average rents at the property have grown 55.5% from $853 to $1,326, with such rapid growth driving the Issuer NCF up 89.6% over the same time period.



COLLATERAL SUMMARY


City, State Henderson, NV Physical Occupancy 94.8%

Units 528 Physical Occupancy Date September 2018

This loan is secured by the borrower’s fee interest in Crystal Creek, a 528-unit garden-style multifamily development located approximately 12 miles south of Downtown Las Vegas in Henderson, Nevada. Originally constructed in 1989 and last renovated in stages between 2015 and 2018, the collateral features 36 two-story buildings and was 94.8% occupied per the rent roll dated September 2018. Loan proceeds of $54.6 million in addition to a borrower cash equity contribution of nearly $23.2 million financed the $77.8 million acquisition of the subject collateral. The ten-year fixed-rate loan is structured with a six-year IO period and amortizes on a 30-year basis thereafter.

The collateral benefited from over $2.9 million ($5,541/unit) in recent capital investment by the seller, which financed asphalt coating and restriping, breezeway coating, clubhouse construction, dog run improvements, exterior lighting upgrades, fitness center renovations, landscaping upgrades mailbox upgrades, office renovations, exterior painting, pool deck resurfacing, roof maintenance, tennis court resurfacing, tub replacements and 76 unit renovations. Unit renovations financed by the seller include sprayed countertops, painted cabinet fronts and updated fixtures for partially renovated units, with new cabinets, countertops, appliances and faux wood flooring for fully renovated units. The classic (non-renovated) units have tile flooring in the entry way, kitchen and bathroom with carpet in the remaining rooms and a standard, older, white appliance package in the kitchen. The transaction sponsor intends to invest an additional $820,000 ($1,553) in capital improvements across the property, including exterior painting, exterior lighting and landscaping upgrades, driveway paving, fitness center upgrades, pool repairs, dog park upgrades, outdoor kitchen area upgrades, sport court upgrades and HVAC replacement. The subject’s unit breakdown consists of 168 one-bedroom units averaging 720 sf, 320 two-bedroom units averaging 1,049 sf and 40 three-bedroom units averaging 1,253 sf. Per the June 2018 rent roll, the

Henderson, NVCrystal Creek

Loan SnapshotSeller



$54.6Loan psf/Unit





1.19xDBRS Refi DSCR



7.7%

Competitive SetMultifamily, Large, Las Vegas-

Paradise, NV MSA, SuburbanMedian Debt Yield


$55,011


$54.6Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$54.6






CRYSTAL CREEK – HENDERSON, NV

subject’s one-bedroom, two-bedroom and three-bedroom units achieved average monthly rental rates of $821, $949 and $1,185 per unit, respectively. The collateral’s amenities include a clubhouse/leasing office, fitness center, three swimming pools, a basketball/tennis court, a dog run and covered parking. The collateral additionally features 816 parking spaces, an aggregate parking ratio of nearly 1.6 spaces per unit. In-unit amenities include electrical heating and air conditioning units, ceiling fans, patio/balcony areas, separate washer and dryer units and full-size kitchen appliances. Select units also feature a fireplace and/or microwave.

COMPETITIVE SET


Subject UnitsYear Built/ Renovated Occupancy

Villas at Green Valley Henderson, NV 0.4 miles 609 1984 96.0%

Martinique Bay Henderson, NV 1.2 miles 256 1989 94.0%

Bay Breeze Henderson, NV 0.3 miles 224 1989 97.0%

The Commons Henderson, NV 1.7 miles 376 1988 96.0%

Crystal Creek Henderson, NV n/a 528 1989/2015 94.8%

Source: Appraisal.

The appraisal identified four multifamily properties within the local market that compete with the subject, all of which are of similar if not older vintage than the collateral. All competitive properties identified by the appraisal boasted strong occupancy figures ranging from 94.0% to 97.0%. Per Reis, 395 units are forecasted to be constructed and 274 units absorbed annually across the collateral’s Henderson/SE submarket over the five-year period ending December 2022, representing a construction/absorption ratio of 1.4 compared with the construction/absorption ratio of 0.9 reported for the five-year period ending December 2017. Inventory growth averaged 3.0% annually across the collateral’s submarket for the five-year period ending December 2017 and is forecasted to average 1.3% annually over the five-year period ending December 2022. Comparatively, inventory growth across the greater Las Vegas MSA averaged 1.1% annually over the five-year period ending December 2017 and is forecasted to average 0.9% annually over the five-year period ending December 2022. Reisfurther reported an average submarket vacancy rate of 4.0% as of Q2 2018, though the figure is skewed upward by the 6.9% vacancy rate reported for properties in the submarket constructed after 2009 as evidenced by the Reissubmarket vacancy of 2.7% for properties built between 1980 and 1989.

SPONSORSHIPThe non-recourse carveout guarantor for this transaction is a pooled investment offering by the loan sponsor, a national real estate investment company focused in acquisition, management and repositioning of multifamily properties. The sponsor has acquired over $2.1 billion in real estate assets since inception in 2004 and has invested in subordinate CMBS representing $11.8 billion of multifamily loans. The sponsor is also a repeat Freddie Mac borrower, having closed 15 transactions totaling approximately $147.0 million since 2010. The fund serving as the guarantor for this transaction is the sponsor’s sixth pooled investment offering with a reported net worth and liquidity of $89.7 million and $73.4 million, respectively, as of April 2018. The fund reported ownership interests in 16 multifamily properties totaling 4,615 units and nearly $453.6 million in market value as of June 2018.

The property is managed by GREP Southwest, LLC, a third-party management entity, for a contractual fee of 2.5% EGI. GREP Southwest is an affiliate of Greystar, which reported management interests in 1,600 properties totaling over 400,000 units as of June 2018, inclusive of 2,281 units in the local area.




DBRS ANALYSISSITE INSPECTION SUMMARYBased on the DBRS site inspection and management meeting conducted on October 4, 2018, at 10 a.m., DBRS found the property quality to be Average.

The subject garden-style multifamily building is located along West Warm Springs Road, approximately 12 miles south of the Las Vegas CBD and tenmiles southeast of Las Vegas Strip. Access to the area is facilitated by I-215 and I-15, located approximately four miles and six miles west, respectively, connecting the area to surrounding communities. The local area is suburban in nature and relatively infill, with limited vacant land available for development. The surrounding area is built out mostly for residential with retail development situated along main arterials. Residential development in the area consists of single-family homes and garden-style multifamily communities that are similar to the subject in vintage, style and condition. Retail development in the area consists of a mix of local and national restaurants, shops and retailers, including Starbucks, Walmart, Trader Joe’s, The Home Depot and Sprouts Farmers Market. Retail, entertainment/gaming, lodging and healthcare sectors serve as big demand generators for the area. Wildhorse Golf Club, Wildfire Casino and Lanes, Sunset Station Hotel and Casino, Galleria at Sunset Shopping Center, McCarran International Airport and Spring Valley Hospital are all located within a short driving distance from the subject.

The property has good visibility based on its location on the corner of West Warm Springs Road and North Green Valley Parkway, with monument signage on display. The property has good curb appeal and fits in well within the immediate area. There are three points of ingress and egress facilitating access to the premises. The main entrance is located along West Warm Springs Road, which leads to the subject’s recently renovated clubhouse and leasing office, an area that contains majority of the subject’s amenities, including one of the swimming pools, one of the fitness centers, a basketball and tennis court, barbecue picnic areas and landscaped courtyard areas. The subject’s swimming pools are well maintained and clean, featuring outdoor lounge chairs and tables as well as a gazebo area. The two fitness centers were also in good condition, featuring an adequate number and variety of equipment. The basketball and tennis court were dated in appearance and in need of maintenance. The landscaping upon entry consisted of flowers, shrubs, trees and grass, which was well manicured and showed nicely. The landscaping of the remainder of the community primarily consisted of grass, shrubs, trees and desertscape in some areas. The interior and the exterior of the clubhouse showed well, given its recent renovation. Individual buildings feature painted stucco exteriors, which were in need of cleaning and a fresh coat of paint. The subject features ample parking with 816 parking spaces located throughout the subject, a 1.6 ratio per unit. Parking spaces and road pavement were generally in good condition, with minor cracking observed throughout, indicating wear and tear.




DBRS inspected three vacant units and one model unit at the subject: a partially renovated one-bedroom unit, a partially renovated two-bedroom/two-bathroom model unit, a fully renovated two-bedroom/two-bathroom unit and a classic (not renovated) three-bedroom/two-bathroom unit. The primary difference between the classic and partially renovated units were newer, black appliances; resurfaced countertops; and painted cabinet fronts. The primary difference between the partially renovated and fully renovated units were newer stainless-steel appliances, cabinets, fixtures and countertops in the kitchen, and newer faux-wood flooring in the kitchen and bathrooms in the fully renovated units. All of the units toured by DBRS were in good, clean and well-maintained condition; however, the classic unit was dated in appearance and in need of updates. According to management, renovated units achieved monthly rental premiums, but management was unable to share the amount of the premiums achieved. Updating interiors of the remaining classic units is something that the management is exploring sometime in the near future. If implemented, targeted rent premiums would range between $150 to $250, depending on the unit type and the scope of renovations. Items on management’s wish list include upgrading the subject amenities and performing a general facelift to building exteriors. The subject’s biggest competition is Villas at Green Valley Apartments (Villas), located approximately one mile north. Villas is of similar size and vintage as the subject, and, reportedly features nicer unit finishes based on its recent renovation. However, the subject has an amenity package that is far superior.

DBRS NCF SUMMARY

NCF ANALYSIS


Variance

GPR $4,971,940 $5,248,174 $5,549,886 $5,696,214 $5,867,412 $5,867,412 0.0%

Other Income $681,079 $759,995 $839,550 $872,746 $774,883 $781,018 0.8%


EGI $5,178,915 $5,611,159 $5,989,441 $6,144,859 $6,314,416 $6,193,522 -1.9%

Expenses $1,878,322 $2,037,237 $1,989,014 $2,013,666 $2,067,179 $2,145,907 3.8%

NOI $3,300,593 $3,573,922 $4,000,427 $4,131,193 $4,247,237 $4,047,615 -4.7%

Capex $0 $0 $0 $0 $132,000 $137,610 4.3%

NCF $3,300,593 $3,573,922 $4,000,427 $4,131,193 $4,115,237 $3,910,005 -5.0%

The DBRS Stabilized NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $3,910,005, a -5.0% variance from the Issuer’s NCF. The main drivers of the variance are vacancy and operating expenses. The Issuer’s vacancy was based on the in-place physical vacancy rate of 5.1% as of the June 2018 rent roll. DBRS applied a 6.8% vacancy plug to achieve a monthly NRI level in line with the T-12 ending June 2018. DBRS operating expenses were generally based on the T-12 level inflated by 3.0%. The resulting 34.6% expense ratio is in line with the 35.6% submarket expense ratio as reported per Reis, but well below securitized multifamily properties in the Las Vegas MSA from the past few years that average closer to 45%. Additionally, the DBRS controllable expense level of $2,303 per unit is deemed appropriate given the $926 per unit DBRS average monthly rent level. DBRS VIEWPOINTThe subject represents a garden-style multifamily apartment complex that is well located near major thoroughfares. The property is easily accessible and has good visibility. The collateral benefits from its location in a middle-class neighborhood that is proximate to retail and within a short driving distance to major area employers. Given the 1989 build, the subject reflects its vintage style while still fitting in well within the immediate area as majority of surrounding buildings are of similar style and approximately 51% of the submarket inventory consists of buildings built between 1980 and 1999. Of the subject’s total units, 85.6% have not undergone a renovation since construction, and although these units have been well




maintained, they are dated in appearance and are in need of a refresh. The subject’s 5.1% vacancy rate and in-place DBRS rent per unit of $926 is underperforming the Reis Q2 2018 Henderson submarket vacancy rate of 2.7% and rental rate of $1,023 for properties of similar vintage. Submarket inventory growth is projected to be modest, averaging 1.3% over the next five years, slightly outperforming the overall market and national averages. New supply will put pressure on vacancy rates; however, new supply is projected to compete in a different price category than the subject. The average market rental rate for properties built after 2009 was $1,394 per Reis Q2 2018 estimates, 50.5% higher than the subject’s in-place average rent as of the June 2018 rent roll. Additionally, inventory growth is projected to have a positive impact on asking rent, which is projected to average 4.1% annual growth through 2023, outperforming the market and national projections.

DOWNSIDE RISKS• The loan is structured with a six-year IO period over the ten-year loan term and exhibits elevated refinance risk with a

low DBRS Exit Debt Yield of 7.8% and DBRS Refi DSCR of 0.83x.

STABILIZING FACTORS• The property benefits from having an experienced sponsorship team, who is investing $23.2 million of cash equity in the

deal. Further, there is some longer-term cash flow upside that could potentially be unlocked by continuing the renovation program and achieving modest rental rate premiums.



COLLATERAL SUMMARY


City, State Vorhees, NJ Physical Occupancy 94.2%


The loan is secured by the borrower’s fee-simple interest in Echelon Glen Apartments, a 432-unit apartment complex located in Vorhees, New Jersey, approximately 17 miles southeast of the Philadelphia CBD. The property was built in 1979 and was renovated between 2016 and 2018. As of June 2018, the complex was 94.2% occupied. Loan proceeds of $50.2 million will refinance $36.2 million of existing debt in addition to funding a $12.7 million cash equity distribution to the borrower. The ten-year loan is IO for five years and amortizes over a 30-year schedule. The garden-style complex has benefited from $1.8 million in renovations since the borrower acquired the property in 2016 for $48.3 million, resulting in a total cost basis of $50.1 million. There is no cash equity remaining behind the loan. Common-area improvements include renovations to the landscaping, parking lot, pool, leasing office and fitness center.

The property mix consists of 138 one-bedroom units (656 sf ), 198 two-bedroom units (864 sf ) and 96 three-bedroom units (1,104 sf ). The property’s average rent of $1,301 is greater than the submarket average of $1,095 and greater than the $1,095 average rent for properties of a similar vintage. The property’s 5.8% vacancy rate is greater than the submarket vacancy rate of 2.7%. The unit amenities include ceiling fans, walk-in closets, patio/balconies and washers/dryers in select units. Common-area amenities include a tennis court, a fitness center, a playground and a swimming pool. The appraiser identified five multifamily properties within the local market and of the same vintage as the subject. For information on how the subject property compares with the competitive set, refer to the table below.

Voorhees, NJEchelon Glen Apartments

Loan SnapshotSeller



$50.2Loan psf/Unit





1.16xDBRS Refi DSCR



7.5%





$50.2Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$50.2






ECHELON GLEN APARTMENTS – VOORHEES, NJ

COMPETITIVE SET


from Subject Units Year Built Occupancy

Foster Square Apartments Vorhees, NJ 1 Miles 353 2011 95.7%

The Club at Maine Street Apartments Vorhees, NJ 4 Miles 240 1990 96.3%

The Village at Vorhees Vorhees, NJ 1 Mile 855 1985 97.1%

The Vista Apartments Vorhees, NJ 0.5 Mile 452 1975 98.0%

Woodland Village Apartments Lindenwood, NJ 3 Miles 546 1968 98.9%

Brookview Apartments Marlton, NJ 2 Miles 166 1989 97.0%

Echelon Glen Apartments Vorhees, NJ n/a 432 1979 94.2%

SPONSORSHIPThe guarantors for this transaction are co-founders of a real estate investment management company created in 2007 and have a combined net worth and liquidity of $49.4 million and $3.8 million, respectively. The guarantors report ownership interests in 27 multifamily assets (3,969 units) and 25 multifamily assets (3,577 units), respectively. The guarantors are repeat Freddie Mac borrowers and have performed as agreed. Property management will be provided by a borrower affiliate that manages 5,000 units primarily in New Jersey and Pennsylvania, with 884 units in the local area.

DBRS ANALYSISSITE INSPECTION SUMMARYBased on a site inspection and management tour conducted on the morning of October 10, 2018, DBRS considers the property quality to be Average.

At the time of visit, the property was 96.0% occupied. The property’s immediate neighborhood is primarily residential with several apartment complexes along Echelon Road, which the property straddles on the north and south sides. A small tunnel provides access across the road to allow residents to cross. The area is situated just south of the Voorhees Town Center, a lifestyle center and regional mall. Voorhees Town Center is a high-vacancy mall that was partially converted from an enclosed mall to include a lifestyle center component that includes residential and office uses. According to the manager, this has not affected the property’s performance as most of the residents are not employed in retail trade.




According to the manager, residents are employed locally in southern New Jersey at major employers such as TD Bank, N.A.Bank in Mount Laurel and New Jersey American Water in Cinnaminson, or in Center City, Philadelphia. PATCO Speedline operates a rail line to Philadelphia that has two stations, Woodcrest and Ashland, that are less than two miles from the property. The New Jersey Turnpike and I-295 are about three miles away, which provides access to employment centers in southern and central New Jersey.

The property exterior is dated and may require some capital over the loan term. The balcony and patio enclosures do not present well and the stairs show some wear. Buildings on the south side of Echelon Road were repainted and the borrower plans to perform similar work on the north side. The property has a modest amenity package with a swimming pool, playground and fitness center. The property’s south side is adjacent to a large public park with sports facilities, including tennis courts and soccer fields. The manager considers this to be an additional amenity given that units close to the park are often those with the highest demand.

The borrower is in the midst of a renovation program that has upgraded about 150 of the 432 units at the property. The manager reported that the borrower is renovating units upon turnover; therefore, they complete about 60 units per year. Renovated units capture a premium of $100 to $150 per month on a cost basis of about $10,000 per unit in upgrades. The renovations include new paint, flooring, kitchen counters and cabinets and fixtures. The manager indicated that the bathroom renovations are more extensive with new bathtubs, flooring and toilets. The property is installing washers and dryers in three-bedroom units. If residents choose to renew their leases in unrenovated units, the property increases rent by about 4% annually. The property is offering a concession of one month free on a 15-month lease. With occupancy at 96%, the manager stated that this is more to sign longer leases in order to better stagger the expiration cycle over the next year.

DBRS NCF SUMMARY

NCF ANALYSIS

2016 2017 T-12 May 2018 Issuer NCF DBRS NCFNCF

Variance

GPR $2,728,778 $5,832,552 $5,961,608 $6,743,515 $6,743,515 0.0%

Other Income $172,267 $463,985 $528,922 $502,556 $515,739 2.6%

Vacancy & Concessions $0 $0 $0 ($529,366) ($781,907) 47.7%

EGI $2,901,045 $6,296,538 $6,490,531 $6,716,705 $6,477,347 -3.6%

Expenses $1,199,192 $2,698,626 $2,746,395 $2,876,083 $2,924,992 1.7%

NOI $1,701,853 $3,597,912 $3,744,136 $3,840,622 $3,552,356 -7.5%

Capex $0 $0 $0 $119,232 $119,232 0.0%

NCF $1,701,853 $3,597,912 $3,744,136 $3,721,390 $3,433,124 -7.7%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $3,368,350, a -9.5% variance from the Issuer’s NCF of $3,721,390. The major drivers of the variance are vacancy and the management fee. DBRS concluded a vacancy rate of 11.6%, which was consistent with the T-12 ending May 31, 2018. The Issuer concluded a vacancy rate of 7.9%. Although the property’s in-place vacancy has improved, there are ongoing renovations that may take units out of service periodically. In addition, the concessions at the property may push the economic loss higher. For the management fee, DBRS’s standard management fee assumption is 4.0% of the EGI. The issuer underwrote a management fee of 2.5%, which is consistent with the contract rate. Because the property manager is a borrower-affiliated company, a market-standard management fee may be higher.




DBRS VIEWPOINTDBRS expects the cash flow to be stable to improving over the loan term. The property is a stable asset in suburban Philadelphia, which has had a strong multifamily market for several years. In addition, the borrower has successfully captured rental premiums from the renovation program, which should continue at a modest pace over the next two years and should lead to incremental improvements in cash flow. With access via public transit to Center City, Philadelphia, the property’s location does provide it with an advantage over those where residents must battle traffic congestion across the Delaware River bridges. While the nearby struggles of the Voorhees Town Center, which has experienced high vacancy, could affect the immediate area, the property’s occupancy has remained stable as the mall has shed tenants over the past few years, which demonstrates a minimal spillover effect.

DOWNSIDE RISKS• The loan has a low DBRS Going-In Debt Yield of 6.9% combined with 60 months of IO payments, resulting in a low DBRS

Exit Debt Yield of 7.5%, which could become a barrier to refinancing the loan at maturity. In addition, the borrower is cashing out $12.7 million.

STABILIZING FACTORS• The borrower continues to renovate units, which is increasing rent by $100 to $150 per renovated unit per month. This

could increase the cash flow over the loan term, which would reduce the leverage. Despite the equity distribution, the borrower plans to continue the renovation program, which at $10,000 per unit could result in reinvestment of up to $2.0 million over the next two to three years.



COLLATERAL SUMMARY

DBRS Property Type MHC Year Built 1955-1984/2018

City, State Various Physical Occupancy 80.6%

Units 1,249 Physical Occupancy Date June 2018

The three cross-collateralized loans are secured by the borrower’s fee simple interest in three MHC communities – the Village at Six Flags, Greenwood Estates and Three Crowns, located in Austell, Georgia, Greenwood, Indiana and Las Vegas, Nevada. The properties were constructed between 1936 and 1984 and feature a total of 1,249 pads. The combined loan amount is $49.8 million, which is being used to refinance $36.8 million in existing debt and return $13.6 million in equity to the sponsor. The sponsor has $4.2 million in cash equity remaining in Three Crowns and no equity remaining in the Village at Six Flags or Greenwood Estates. No cash equity remains in aggregate across the three properties. The ten-year loan is IO for the first three years and amortizes on a 30-year schedule for the remaining seven years.

The Village at Six Flags is a 469-pad MHC community that was originally constructed in 1984. The property sits on a 102-acre lot and features a clubhouse, pool, outdoor playground and basketball court. The pads primarily consist of multi-section sites, with 374 (79.7% of the total pads) and the remaining are single-section sites, with 94 pads (20.2% of the total). There are 1,196 parking spaces equating to 2.6 spaces per unit. The sponsor acquired the property in 2012 for $16.0 million in distressed condition, subsequently working to lease up and improve the property. Prior to renovations in 2015, the property was 15.6% vacant. Following $606,128 in capital improvements from 2015 to 2018, the property has reached an occupancy of 95.7% as of June 2018. Capital improvements included landscaping, road paving, sewer/water line improvements, electrical replacement and clubhouse renovation. The subject has a substantial 145 pads (30.9% of the total) occupied by homes owned by a borrower-affiliate and rented on an initial one-year lease term, which then go month-to-month. The property has average rents of $543 per pad, which is on the higher end but in line with comparables that range from $541 to $608 per pad. According to the appraisal, the estimated total

Various, Various

Village at Six Flags, Greenwood Estates and Three Crowns

Loan SnapshotSeller



$49.8Loan psf/Unit





1.18xDBRS Refi DSCR



8.2%

Competitive SetMHC, Large, Suburban




$49.8Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$49.8






VILLAGE AT SIX FLAGS, GREENWOOD ESTATES AND THREE CROWNS – VARIOUS, VARIOUS

monthly obligation to own is $838 per month, below that of the estimated monthly cost of a two-bedroom apartment in the area of $900 to $1000 per month. Being that affordability is a primary demand driver for MHC communities, low monthly obligations compared with other housing options is indicative of a strong market for MHC communities.

Greenwood Estates is a 514-pad MHC community built in multiple phases, starting in the 1950s and extending through the mid-1980s. The property has a clubhouse, single-family home, commercial building, maintenance building and two garages. Common area amenities at the property include a clubhouse, swimming pool, fitness center and a playground. 308 of the pads (59.9% of the total pads) are single-section, with the remaining 206 being multi-section pads (40.1% of total). The sponsor acquired the property in 2014, for an undisclosed sum. 279 homes at the property (54.3% of the total) are owned by a borrower-affiliate. The subject exhibits strong affordability compared with both owning a single-family home and renting a two-bedroom apartment in the submarket. The appraisal estimated a total monthly obligation of $888 at the subject, compared to owning a single-family home for $998 per month and renting a two-bedroom apartment with a range of $700 to $1,100 per month. Recent capex at the property include asphalt repairs, landscaping, plumbing, fence replacement and playground upgrades, which were completed between 2015 and 2017, for a total of $326,189.

Three Crowns is a 266-pad MHC community originally constructed in 1970, and acquired by the sponsor in November 2014. The pads are age-restricted and only allow occupants over the age of 55. The 33.6-acre lot includes 247 multi-section pads (92.9% of total pads) and 19 single-section pads (7.1% of total pads), along with a clubhouse, outdoor pool and spa, shuffleboard court, picnic area, library, fitness center, billiards parlor, banquet hall, sauna, central laundry and an RV storage area. The sponsor acquired the property in November 2014, for $12.3 million. Recent capital improvements totaled $284,245 and included upgrades and repairs to plumbing/gas, parking lot repairs and clubhouse renovation. According to the appraisal, the community does not benefit from affordability compared with other housing options in the area, but rather the occupants are at the community as a lifestyle choice. The estimated total monthly obligation to own a manufactured home at the subject is $911, which includes financing, taxes and insurance. Comparatively, a single-family home located in the subject is estimated to have a total monthly obligation of $697. The sponsor has a relatively high number of park-owned homes (POHs) at 65 or 24.4% of the total pads. For all three properties, the POHs are owned by a borrower-affiliate, with the sponsor acting as a collecting agent for the borrower-affiliate and remitting payments monthly. The borrower-affiliate joins the leases with tenants via a rider. Apartment rates in the area also do not bode well for the subject, with a two-bedroom/two-bathroom renting for $823 per month. The more affordable alternatives in the area are also the primary driver of the 39.5% vacancy at the property as of June 2018, and historical vacancy of between 37.3% and 42.9% since 2015.

PORTFOLIO SUMMARY

Property City, State Units Year BuiltCut-Off Date Loan

Amount% of Cut-Off

Date Loan Amount Occupancy

Village at Six Flags Austell, GA 469 1984 $23,660,000 47.5% 95.7%

Greenwood Estates Greenwood, IN 514 1955 $18,022,000 36.2% 77.4%

Three Crowns Las Vegas, NV 266 1970 $8,135,000 16.3% 60.5%

Total/Wtd. Avg. Various 1249 Various $49,817,000 100.0% 80.7%

SPONSORSHIPThe sponsor for this loan is an experienced MHC owner and operator with more than 230 communities totaling more than 60,000 pads across 24 states. The sponsor disclosed three prior foreclosures, two by Freddie Mac and one by Fannie Mae that took place between 2003 and 2006. The sponsor funded approximately $6.6 million in shortfalls between the three foreclosed properties. Management is provided by a sponsor-affiliated entity for a contractual rate of 4.0% of EGI.




DBRS ANALYSISSITE INSPECTION SUMMARY

VILLAGE AT SIX FLAGS – AUSTELL, GA

DBRS toured the exterior of the property on Tuesday, October 9, 2018, at 1:00 p.m. Based on the site inspection and management tour, DBRS found the property quality to be Average.

The subject is located in Austell, GA, 13.4 miles west of the Atlanta CBD. The property sits to the southwest of Six Flags Over Georgia, a 290-acre theme park with more than 40 rides. The immediate area is almost entirely industrial, except for the subject and nearby gas station. A Walmart, along with a variety of other smaller retail shops, is located less than two miles away. The property benefits from access to I-20, which leads east to downtown Atlanta, located near Six Flags Over Georgia three miles northeast. In addition, south of the property along Fulton Industrial Boulevard SW is a large industrial corridor which may provide employment opportunities for current and prospective tenants.

Entrance to the property from Riverside Parkway is easily visible and sits at a four-way traffic signal. Very few of the homes are visible from surrounding roads and the entire property has a secluded and private feel as a result of being surrounded by trees. The clubhouse is located just down the road on the right after entering and features two basketball courts, a playground and swimming pool in the back. A large parking lot is available just to the north of the clubhouse with ample parking for visitors and guests using the common areas. Upon inspection, the clubhouse appeared up to date and in good condition, along with the nearby common areas. Both tenant-owned and park-owned homes at the subject showed signs of pride-of-ownership and were generally well kept, with a few exceptions. DBRS toured the entirety of the property, and noted roads appeared in good condition with deferred maintenance limited to cracking in the pavement.

GREENWOOD ESTATES – GREENWOOD, IN

Based on the DBRS site inspection and management meeting conducted on Wednesday, October 3, 2018, at approximately 1:00 p.m., DBRS found the property quality to be Average.

The subject is situated along U.S. Route 31, a major north-south highway connecting the Greenwood area with the city of Indianapolis. The property is highly visible from the highway and has a large sign that’s easily seen by passing cars on U.S. Route 31. The immediate surrounding area is lightly infilled by single-family homes and retail establishments strew alongside the highway. A Kroger grocery store and several restaurants are located within a mile of the subject, making shopping relatively easy for the subject’s residents. The local economy is driven by industrial uses with Ulta Beauty, Inc., Aldi, United Natural Foods and Nestle Waters all having distribution centers located in Greenwood. Of note, the subject is also situated about 20.0 miles southeast of the Indianapolis International Airport. Per management, the primary competition is provided by Pebble Creek, an all-age MHC complex that shares a property line with the subject.

Situated across 96.3 acres, the collateral consists of four land parcels; the two north parcels of land were developed in the mid-1950s, while the south parcels were added and developed between the early 1970s and the mid-1980s. There are future plans to expand the property with 90 additional pads on the north side. Management hopes to install 60 new homes this year, which is fairly typical for the property, with the installation process generally taking around ten days. According to property management, newer homes constructed after 2015 rent for over $800 per month, while homes built prior to 2015 rent for about $795 per month. The subject has no seasonal rentals and only allows month-to-month leases after a tenant has rented a home for one year. The property’s amenities include a clubhouse, an outdoor pool, a fitness center and a playground. The clubhouse building contains the fitness center, a property management office and a common room. The clubhouse’s common room contains an ornate fireplace with couch seating and dining tables. Property management noted that the pool, which was closed for the season during the inspection, was recently resurfaced and that the fitness center underwent an overhaul. Additional recently completed capex include asphalt repairs, landscaping improvements,




new plumbing installations and fencing upgrades. The borrower plans to invest another $77,500 for asphalt repairs over the following 12 months as certain roads around the property contained major potholes and spalling. Each pad has two parking spaces that were generally in adequate condition with moderate cracking present. All homes have water and sewer connections and pads on the south side of the property’s grounds are metered by property management and pads on the north side are metered by the City of Greenwood. Overall, DBRS found the property to be generally well-maintained and in good condition at the time of inspection.

THREE CROWNS – LAS VEGAS, NV

Based on the DBRS site inspection and management meeting conducted on Thursday, October 4, 2018, at 11:30 a.m., DBRS found the property quality to be Average.

The subject is located along North Lamb Boulevard, in Las Vegas, NV, 4.5 miles east of the Las Vegas CBD and ten miles northeast of the Las Vegas Strip. The property has good visibility along North Lamb Boulevard and East Washington Avenue with two points of ingress and egress and it also has appropriate signage and attractive landscaping on display along both entrances, welcoming residents in. The local area is suburban in nature and relatively infill, with limited vacant land available for development. The immediate area development is primarily residential in nature with some retail presence along main thoroughfares. Residential uses include other MHC communities, garden-style apartment complexes and single-family homes, most of which are in similar vintage and condition as the subject. Area retailers include CVS Pharmacy, Family Dollar and Walgreens, as well as local grocery stores, shops and restaurants. Other area demand drivers include the Desert Pines High School, Mountain View Christian School and Oran K. Gragson Elementary School.

The property features a medium height brick wall and fence surrounding the perimeter, as well as entry gates and security patrols for security purposes. Management did not report security to be a problem at the subject, however, this is reportedly an important feature for the residents. DBRS observed major asphalt cracking in some areas due to gas line work being performed at the subject. The gas line work is being paid for by the borrower and is planned to be completed before the end of 2018, after which the management plans to upgrade the roads. The subject clubhouse and leasing office are located at the center of the community and houses the community’s amenities, which include a covered shuffleboard court, community kitchen, fitness center, billiards room, common laundry, library, barbecue grilling area and one pool and spa. The common area amenities were well maintained and in good condition, however, dated in appearance given its construction in 1970, without a major renovation since then. The age and condition of homes varied by style and vintage, however, generally appeared to be in good condition. The subject is an age 55 and plus restricted community. According to management, the majority of the residents are comprised of retirees and people on fixed income. Community events, such as bingo nights and social gatherings are held periodically by management to create a sense community amongst residents.

DBRS toured two new homes at the time of the site inspection, a two-bedroom and a three-bedroom home. The homes were in good condition and featured black appliances, faux-granite countertops, vinyl flooring and wood cabinetry. Management indicated that older homes would feature significantly dated interiors, which at turnover would most likely be replaced by a new home. There were two homes being demolished and three new homes being installed at the time of the site inspection. Once installed, the new homes are planned to be offered for sale or rent. Management noted Palm Grove, located approximately three miles south, to be one of their biggest competitors based on its proximate location and condition. Palm Grove was found by the appraiser to be in better condition to the subject, however, the subject has an amenity package that is far superior. Items on management’s wish list includes road upgrades, clubhouse roof repairs, tree trimming, front gate keypad upgrades and fitness center equipment upgrades.




DBRS NCF SUMMARY

NCF ANALYSIS


Variance

GPR $7,874,394 $8,069,242 $8,269,074 $8,366,215 $8,470,691 $8,470,691 0.0%

Other Income $959,976 $954,257 $958,096 $982,375 $982,375 $982,375 0.0%

Vacancy & Concessions ($2,831,675) $954,257 ($2,623,974) ($2,515,662) ($2,410,153) ($2,588,593) 7.4%

EGI $6,002,695 $9,977,756 $6,603,196 $6,832,928 $7,042,913 $6,864,473 -2.5%

Expenses $3,087,536 $3,134,775 $3,068,067 $3,117,957 $3,143,033 $3,251,306 3.4%

NOI $2,915,159 $6,842,981 $3,535,129 $3,714,971 $3,899,880 $3,613,167 -7.4%

Capex $13,300 $13,300 $13,300 $13,300 $62,450 $62,450 0.0%

NCF $2,901,859 $6,829,681 $3,521,829 $3,701,671 $3,837,430 $3,550,717 -7.5%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $ $3,550,717, a -7.5% variance from the Issuer’s NCF. The primary drivers are vacancy and management fees. DBRS concluded a vacancy 30.6%, inclusive of 3.6% of concessions and bad debt. Vacancy rates were used to achieve T-12 NRI ending June 2018 for Village at Six Flags and Greenwood Estates, while a vacancy rate for Three Crowns was used to achieve a T-9 NRI level. This compares to the Issuer’s vacancy figure of 29.1%. DBRS used management fees of 5.0% of EGI compared with 3.7% overall for the Issuer. DBRS VIEWPOINTThe three cross-collateralized loans have a combined DBRS Going-In Debt Yield and DBRS Exit Debt Yield of 7.1% and 8.2%, respectively. Both are relatively low for comparative MHCs in similar markets and are indicative of high term and maturity default risk. The properties have varying degrees of performance that are representative of the strength of their respective markets. Three Crowns, which is 60.5% occupied, is located in the least favorable market as manufactured homes do not present an affordable option compared to other housing options in the submarket. The property also has 24.4% POHs, which typically results in higher tenant turnover and is another sign of demand weakness in the area. However, the loan amount is relatively modest with an LTV of 54.2%. Greenwood Estates is 77.4% occupied and is in a slightly more favorable market with better affordability. However, the property has more than 54% of pads occupied by




POHs and is more highly levered at a 61.9% LTV ratio. Village at Six Flags is both the highest performing asset at 95.7% occupancy and has the highest DBRS Going-In Debt Yield and DBRS Exit Debt Yield of 7.7% and 8.8%, respectively, both of which are still indicative of higher term and maturity default risk. The property is located in the most favorable market, with strong affordability, but has approximately 31% POHs. The loan for Village at Six Flags has a higher LTV ratio at 65% as well. The sponsor cashed out $13.6 million as part of the transaction and will have no cash equity remaining in Village at Six Flags or Greenwood Estates, though there is $4.1 million in cash equity remaining in Three Crowns. The purchase price for Greenwood Estates was not disclosed, but there appears to be no cash equity remaining in aggregate across the three properties given the cash-out related to Village at Six Flags exceeds the remaining cash equity in Three Crowns.

DOWNSIDE RISKS• The ten-year loan is structured with three years of IO and exhibits high term and maturity default risk as seen by the

combined DBRS Going-In Debt Yield and DBRS Exit Debt Yield of 7.1% and 8.2%, respectively.

STABILIZING FACTORS• The sponsor is highly experienced and one of the largest owners and operators of manufactured housing communities

in the country.



COLLATERAL SUMMARY


City, State Gilbert, AZ Physical Occupancy 96.4%

Units 366 Physical Occupancy Date August 2018

This loan is secured by the borrower’s fee interest in Vistara at San Tan Village, a 366-unit garden-style multifamily development located 25.7 miles southeast of Downtown Phoenix in Gilbert, Arizona. Originally constructed in 2017, the collateral features 19 three-story buildings and was 96.4% occupied per the rent roll dated August 2018. Loan proceeds of $48.1 million in addition to a borrower equity contribution of nearly $25.1 million financed the $73.2 million acquisition of the collateral in September 2017. The 11-year fixed-rate loan is full-term IO. As of loan closing, the sponsor retained $25.1 million of cash equity in the transaction.

Originally completed in August 2017 and stabilized in March 2018, the subject loan was originated as part of a Freddie Mac pre-stabilized lending program for new construction properties undergoing lease-up. After beginning pre-leasing in April 2016, the property leased at an absorption rate of approximately 18 units per month. The subject’s unit breakdown consists of 177 one-bedroom units averaging 799 sf, 179 two-bedroom units averaging 1,143 sf and ten three-bedroom units averaging 1,396 sf. Per the July 2018 rent roll, the collateral’s one-, two- and three-bedroom units achieved average monthly rents of $1,052, $1,411 and $1,709, per unit, respectively. Common-area amenities at the collateral include a heated pool with a spa and decorative water features, cabanas with multiple flat screen televisions, fireplaces, gaming, lounge and kitchen areas, a fitness center, a clubhouse and community room with free WiFi, work stations, a coffee bar, an entertainment area, a playground and controlled gate access. The property additionally features 653 parking spaces, an aggregate parking ratio of nearly 1.8 spaces per unit. In-unit amenities include washer/dryer units, ceiling fans, walk-in closets and patio/balcony areas.

Gilbert, AZVistara at San Tan Village

Loan SnapshotSeller



$48.1Loan psf/Unit



October 2028Amortization


1.87xDBRS Refi DSCR



7.8%





$48.1Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$48.1






VISTARA AT SAN TAN VILLAGE – GILBERT, AZ

COMPETITIVE SET



San Privada Gilbert, AZ 2.2 miles 296 2014 93.0%

Redstone at San Tan Village Gilbert, AZ 0.5 miles 382 2013 95.0%

Vive Chandler, AZ 9.9 miles 194 2014 92.0%

Camden Chandler Chandler, AZ 8.7 miles 380 2015 94.0%

Almeria at Ocotillo Chandler, AZ 11.3 miles 388 2014 97.0%

Vistara at San Tan Village Gilbert, AZ n/a 366 2017 96.4%

Source: Appraisal.

The appraisal identified five multifamily properties within the local market that compete with the subject, all of which are of similar vintage to the collateral. All competitive properties identified by the appraisal have strong occupancy figures ranging from 92.0% to 97.0%. Per Reis, 482 units are forecasted to be constructed and 322 units absorbed annually across the collateral’s Chandler/Gilbert submarket over the five-year period ending December 2022, a construction/absorption ratio of 1.5 compared to the construction/absorption ratio of 1.1 reported for the five-year period ending December 2017. Inventory growth averaged 5.1% annually across the collateral’s submarket for the five-year period ending December 2017 and is forecasted to average 2.0% annually over the five-year period ending December 2022. Comparatively, inventory growth across the greater Phoenix MSA averaged 1.7% annually over the five-year period ending December 2017 and is forecasted to average 1.3% annually over the five-year period ending December 2022. Reis further reported an average submarket vacancy rate of 6.1% as of Q2 2018, though the figure is arbitrarily skewed upward by the 11.4% vacancy rate reported for properties in the submarket constructed after 2009 as evidenced by the Reis-reported median submarket vacancy of 4.6% for the same period.

SPONSORSHIPThe sponsor and non-recourse carveout guarantor for this transaction is a subsidiary of a non-traded, open-ended REIT specialized in stabilized commercial real estate properties diversified by sector with a targeted portfolio allocation consisting of 80.0% properties and 20.0% real estate debt securities. The sponsor/guarantor entity was formed in January 2017 to own and operate multifamily properties and reported ownership interest in eight multifamily properties as of April 2017. The sponsor/guarantor additionally reported a net worth and liquidity of $648.6 million and $6.8 million as of July 2017.

The property is managed by Olympus Property, a third-party management entity, for a contractual fee of 3.0% EGI. As of June 2018, Olympus Property reported management interests in approximately 40 multifamily properties totaling over 14,000 units, inclusive of approximately 1,000 units in the local area.




DBRS ANALYSISSITE INSPECTION SUMMARYBased on the DBRS site inspection and management meeting conducted on October 8, 2018, DBRS found the property quality to be Average (+).

The property is located along South Coronado Road, which is west of Route 202 (Santa Freeway) with access at South Higley Road and about 26 miles southeast of the Phoenix CBD. The immediate surrounding area consists of other competing apartment communities of similar vintage and single-family homes. To the north are low density single-family homes compared to the densely populated single-family home neighborhood located west of the subject. Furthermore, the appraisal mentions that the vacant lot immediately east of the subject is identical in size and zoned for single-family homes and multifamily developments. Immediately south is a similar property under the same management as the subject.

The subject consists of 19 multifamily buildings totaling 366 units as well as a leasing office/clubhouse. The property leasing office and clubhouse are located at the entrance of the apartment complex, with most of the common amenities located inside or adjacent. The leasing office has a large sitting area with a fireplace, a kitchenette and vaulted ceilings. Connected to the leasing office are the tenant amenities, which include a fitness center and a large saltwater pool located directly behind the leasing office. The pool area is surrounded by lounge chairs, a perimeter fence and covered common space equipped with shuffleboard, ping pong, televisions and lounge seating. Beyond the pool area was the clubhouse with additional resident amenities including a business center, additional meeting space, party room and shuffleboard. Parking was ample, with approximately 653 spaces with a mix of garage, surface and carport parking, which equated to a parking ratio of 1.78 spaces per unit. The individual buildings are in good condition with minimal deferred maintenance.

DBRS toured three vacant units. All units toured featured an open layout with the kitchen near the entrance and a seamless transition to the living room. The kitchen included black/steel appliances, a breakfast bar with granite countertops and wood cabinets with grey granite countertops and vinyl wood floors. The open kitchen and living room design gave off a very spacious feel for the 1,100 sf two-bedroom unit. Bathrooms have vinyl wood floors with cabinets similar to the kitchen as well as a combination tub/shower. The master bathrooms were equipped with a large standup shower with oversized countertops and attached walk-in closet. Bedrooms and living rooms were carpeted and had ceiling fans as well as various smart home amenities including smartphone-controlled lights, air conditioning and locks. The units were also equipped with a washer and dryer in the utility closet. Overall, units were in good condition and ready for lease-up.




DBRS NCF SUMMARY

NCF ANALYSIS

Budget Appraisal Issuer NCF DBRS NCFNCF

Variance

GPR $5,584,097 $5,478,192 $5,470,140 $5,470,140 0.0%

Other Income $852,000 $852,780 $795,482 $795,482 0.0%

Vacancy & Concessions ($279,205) ($328,692) ($455,991) ($402,055) -11.8%

EGI $6,156,892 $6,002,280 $5,809,631 $5,863,567 0.9%

Expenses $1,874,580 $1,907,715 $1,944,643 $2,044,191 5.1%

NOI $4,282,312 $4,094,565 $3,864,988 $3,819,376 -1.2%

Capex $0 $91,500 $84,180 $91,500 8.7%

NCF $4,282,312 $4,003,065 $3,780,808 $3,727,876 -1.4%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $3,727,876, a -1.4% variance from the Issuer’s NCF. The main driver of the variance is inflated real estate taxes. DBRS inflated real estate taxes by 6.0% to account for a reassessment in the near future.

DBRS VIEWPOINTThe loan is secured by a newly constructed and stabilized apartment complex in Gilbert, Arizona, approximately six miles east of the Chandler CBD and 26 miles southeast of Phoenix’s CBD. The property benefits from favorable access to major thoroughfares and demand drivers throughout the MSA. Situated a short 45 minutes from the Phoenix CBD, residents have seamless access to some of the largest employers in the area. According to the appraisal, the Chandler/Gilbert submarket is expecting an influx of new supply (1,831 units completed, 1,001 units planned and 1,167 units proposed) over the next five years, which will increase the submarket apartment inventory; however, absorption has been strong and kept pace with new supply on a ratio of 1:1 (704 units to 699 units) over the last ten years. Furthermore, the property management did not mention concern about the new development coming online and expects the market to be able to successfully absorb the new units. Overall, the loan exhibits moderate leverage, as evidenced by the DBRS Debt Yield of 7.8% and DBRS Term DSCR of 1.89x. The loan amount equates to $131,500 per unit, which is slightly below recent multifamily sales comparables in Gilbert. According to Real Capital Analytics, 12 multifamily properties have been sold over the past 24 months, reflecting an average sale price of $146,643 per unit.

DOWNSIDE RISKS• The loan is structured with a full-term IO and exhibits elevated refinance risk with a low DBRS Exit Debt Yield of 7.8%

and DBRS Refi DSCR of 0.85x.

STABILIZING FACTORS• Based on the DBRS NCF occupancy level of 92.7%, the DBRS vacancy is more conservative than the vacancy level

provided while on site and above the Reis market levels projected over the next five years.



COLLATERAL SUMMARY


City, State Kennesaw, GA Physical Occupancy 91.6%


The loan is secured by the borrower’s fee simple interest in The 1800 at Barrett Lakes, a 500-unit garden-style multifamily property located in Kennesaw, Georgia. The property was originally constructed in two phases in 1988 and 1996, and occupies a 67.8-acre lot. The $40.9 million loan was used to refinance $33.8 million in existing debt and returned approximately $6.3 million of equity to the sponsor. The sponsor has $12.2 million in equity remaining in the deal. The ten-year loan is IO for the first five years after which it amortizes over a 30-year schedule.

The complex consists of 38 three-story apartment buildings, a clubhouse with fitness center and business center, as well as a pool, sauna, tennis courts, sports court, playground, car care center, dog park, picnic/barbecue area and four garage structures. Unit mix at the property includes 190 one-bedroom units (893 sf ), 220 two-bedroom units (1,155 sf ) and 90 three-bedroom units (1,327 sf ). Comparatively, one-bedroom units at the property are slightly larger than the submarket average of 788 sf, the two-bedroom units are generally in line with the submarket average of 1,126 sf and the three-bedroom units are slightly smaller than the submarket average of 1,409 sf. Unit amenities include fully equipped kitchens, balcony, washer/dryer connections and large walk-in closets. Since acquisition in November 2014, the borrower has invested $4.1 million into the property, including exterior repairs and painting, clubhouse renovations, pool repairs and unit renovations to 265 units. Unit renovations include new white kitchen cabinetry, black appliances, vinyl countertops, upgraded carpet in living areas, along with bathroom cabinetry, flooring and fixtures. The borrower plans to renovate remaining units as they turn.

Based on the June 2018 rent roll, the property’s average monthly rental rate was $1,021, in line with the submarket average for Q2 2018 of $1,082, according to Reis.

Kennesaw, GAThe 1800 at Barrett Lakes

Loan SnapshotSeller



$40.9Loan psf/Unit





1.20xDBRS Refi DSCR



7.9%

Competitive SetMultifamily, Large, Atlanta-Sandy Springs-Marietta, GA MSA, Suburban




$40.9Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$40.9






THE 1800 AT BARRETT LAKES – KENNESAW, GA

The property’s vacancy rate based on the same rent roll is 8.4%, above the submarket average of 3.5%. See below for additional information regarding how the subject compares with the competitive set.

COMPETITIVE SET

PropertyDistance from

Subject UnitsYear Built/ Renovated Occupancy

Avg. Rent Per Unit

Mountain Park Estates Apartment 1.9 mi 450 1999 95.0% $1,303

Heights at Kennesaw Apartment 0.5 mi 446 1997 95.0% $1,262

Lakeside at Town Center Apartment 3.2 mi 358 2001 94.0% $1,390

Park at Kennesaw 2.4 mi 212 2004 94.0% $1,175

Laurel Hills Preserve 3.4 mi 720 1987 90.0% $881

Barrett Walk 0.9 mi 290 2002 97.0% $1,351

Ashford Ridenour 1.0 mi 255 2001 95.0% $1,242

The 1800 at Barrett Lakes (Subject) n/a 500 1988-1996/2014 91.6% $1,120

Source: Appraisal.

SPONSORSHIPThe guarantor is an experienced integrated real estate investment, management and development company with more than $4.0 billion in residential/multifamily assets owned or managed. The sponsor is a repeat Freddie Mac borrower with more than 70 transactions completed since 2004. The property is managed by a sponsor-related entity for a contractual fee of 3.0%.

DBRS ANALYSISSITE INSPECTION SUMMARYDBRS toured the interior and exterior of the property on October 9, 2018, at 11:30 a.m. Based on the site inspection and management tour, DBRS found the property quality to be Average.

The subject is located in Kennesaw, GA, 23.5 miles northwest of the Atlanta CBD. To the north is a mix of office properties and other multifamily complexes and to the south is a collection of industrial properties. Directly east of the property is vacant land followed by single-family residential and to the west is vacant land with retail and single-family residential.




The subject sits just two miles south of Town Center at Cobb, a 1.3 million sf mall anchored by Macy’s, JCPenney, Belk, Inc. and Sears and is owned by Simon Property Group. Access to I-75, the major interstate in the area leading southeast to downtown Atlanta, is provided by the intersection just south of the mall. The property also benefits from proximity to Kennesaw State University, located three miles southeast with annual enrollment of 35,000 students. The subject has a student concentration of between 15% and 20%.

Entrance to the property is on Barrett Lakes Boulevard, a split lane connector road providing access to the nearby office parks and other multifamily properties. Signage was attractive and easily visible from both sides of the road. Upon entering, the clubhouse and leasing office is located immediately to the right. The clubhouse has a fitness center in the basement and patio area with two pools in the back. The fitness center appeared up-to-date and in very good condition upon inspection. The pool areas also appeared clean and well kept, with no signs of deferred maintenance. The attractive leasing office and clubhouse is likely to support the property’s leasing efforts. Just beyond the clubhouse to the west are two tennis courts, which at the time of inspection were being converted to a gazebo area with additional patio space. Management noted the tennis courts were underutilized and that the new gazebo would be completed within the coming weeks. The property includes 38 multifamily buildings, all of which have dark green wood siding, white trim and brick chimneys and a combination of entrances on the building ends or breezeway entryways. Exteriors appeared in good condition, though some deferred maintenance was noted relating to the entryway stairs and unit doors. Landscaping was well kept and attractive throughout the property.

Approximately 265 units representing 53% of the total units have been renovated since the borrower acquired the property in November 2014. Renovations include white cabinetry, new black appliances and laminate countertops in the kitchens, new cabinetry and fixtures in the bathrooms, along with updated carpeting. The previous owner also renovated select units with new cherry cabinetry in the kitchens and updated black appliances. DBRS inspected the interior of a two-bedroom sponsor-renovated model unit, as well as a one- and two-bedroom unit that were previously renovated by the previous owner. The new renovations appear to have superior quality and stronger appeal than the previous renovations. Management noted premiums on renovated units are achieving between $100 and $150 per month over non-renovated units. Premiums over the select few that were renovated by the previously owner are slightly less. Management plans to renovate remaining units as they turn.

DBRS NCF SUMMARY

NCF ANALYSIS


Variance

GPR $5,170,595 $5,565,103 $5,872,628 $5,992,379 $6,127,896 $6,127,896 0.0%

Other Income $538,562 $565,103 $607,980 $659,601 $659,601 $659,601 0.0%


EGI $5,338,022 $5,717,465 $5,959,977 $6,065,969 $6,175,253 $6,080,014 -1.5%

Expenses $2,394,113 $2,611,591 $2,773,347 $2,707,837 $2,925,719 $2,959,073 1.1%

NOI $2,943,909 $3,105,874 $3,186,630 $3,358,132 $3,249,533 $3,120,941 -4.0%

Capex $0 $0 $0 $0 $165,680 $165,500 -0.1%

NCF $2,943,909 $3,105,874 $3,186,630 $3,358,132 $3,083,853 $2,955,441 -4.2%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $2,894,641, an -6.1% variance from the Issuer’s NCF. The primary drivers are vacancy, operating expenses and management fees. DBRS used an economic vacancy of 13% compared with the Issuer’s economic vacancy of 10%, resulting in a -$95,239




variance. DBRS based operating expenses on T-12 figures inflated by 3%, while the Issuer used T-12 operating expenses. The Issuer based management fees on the contractual rate of 3% to a borrower-related management company, while DBRS used a 4% management fee.

DBRS VIEWPOINTThe loan exhibits high term and maturity default risk as evidenced by the low DBRS Debt Yield of 7.1% and low DBRS Exit Debt Yield of 7.9%. Helping to mitigate default risk is the property’s strong location with nearby demand drivers, upside in rental premiums being achieved as a result of on-going renovations and an experienced sponsor. The subject is located within the Marietta submarket, the second-largest in the Atlanta metro and has historically exhibited strong fundamentals, including a five-year average vacancy of 3.8% and current vacancy of 3.5%. Rental rates and absorption have been relatively flat over the same period, though concessions have been burning off as of recent indicating stronger demand in the area. Partially offsetting this is around 403 units to be completed by the end of 2018, likely resulting in positive absorption for the year and a slight increase in vacancy rates to 4.4%. The property is also located within an affluent county, Cobb County, with a median household income of $68,818, above the statewide median of $51,037 and national median of $55,322. Local demand drivers include the Town Center at Cobb and other retail just north of the property, a variety of office parks and employment opportunities, as well as Kennesaw State University. Approximately 15% to 20% of units are leased to students at Kennesaw State University as a result of being located just three miles from campus. Leases to students are signed with parental guarantees and do not come furnished. Management noted that this is likely to continue to be a strong source of demand for the property as the college is only able to support around a quarter of the 35,000 students on campus, with students moving off campus following their freshman year. Since acquisition, the sponsor has renovated just over half of the units at the property, or 53%. Renovated units are achieving between $100 and $150 in rental premiums compared to non-renovated units and the sponsor will continue to renovate remaining units as units turn, which will provide upside to rent collections. Finally, the sponsor has significant experience in the ownership and management of multifamily properties with more than $4.0 billion in residential/multifamily assets and has completed more than 70 transactions with Freddie Mac as the lender.

DOWNSIDE RISKS• The ten-year loan is structured with an initial five-year IO period and has a low DBRS Debt Yield of 7.1% and a low DBRS

Exit Debt Yield of 7.9%, indicating high term and maturity default risk, respectively.

• The borrower cashed out $6.3 million in cash equity as part of the transaction.

STABILIZING FACTORS• Current occupancy of 91.6% is well below the five-year average submarket occupancy of 96.2% and rental premiums of

between $100 and $150 are being achieved from renovated units, presenting an opportunity for the borrower to lease additional units and increase rental rates. This represents upside potential in the NCF and a resulting reduction in both term and maturity default risk.

• The borrower has invested $4.1 million in renovation work and as a result has $12.2 million in cash equity remaining in the deal, representing approximately 23% of their total cost basis.



COLLATERAL SUMMARY


City, State Colorado Springs, CO Physical Occupancy 94.0%


This loan is secured by the borrower’s fee interest in The Oasis, a 252-unit garden-style multifamily development located approximately 70 miles south of Downtown Denver in Colorado Springs, Colorado. Originally constructed in 1998 and last renovated in 2018, the collateral is comprised of 17 three-story buildings and was 94.0% occupied per the rent roll dated June 2018. However, at the time of DBRS inspection in October 2018, management indicated the property had fallen to an 89.3% occupancy. Loan proceeds of $39.7 million refinanced $28.0 million of existing debt on the property, returned nearly $11.5 million of cash equity to the sponsor and funded an initial tax escrow deposit of $61,243. The ten-year fixed-rate loan is structured with a five-year IO period and amortizes on a 30year basis thereafter. As of loan closing, the borrower retained approximately $2.9 million of cash equity in the transaction.

The sponsor acquired the collateral in 2014 for a reported purchase price of $39.9 million. Between acquisition and 2018, the borrower invested over $2.7 million ($10,909 per unit), renovating 234 units ($11,748 per renovated unit) with new cabinets, countertops, stainless-steel appliances, flooring, light fixtures, asphalt seal coating, asphalt and concrete repairs and new roofs on nine buildings. At the time of DBRS inspection, management indicated that monthly rent premiums of $110 and $140 per unit were being achieved for one-bedroom and two-bedroom units, respectively. The collateral’s unit breakdown consists of 148 one-bedroom units averaging 757 sf and 104 two-bedroom units averaging 1,082 sf. Per the June 2018 rent roll, the collateral’s one- and two-bedroom units achieved average monthly rents of $1,256 and $1,530 per unit, respectively. Common-area amenities across the property include a clubhouse with a lounge area and kitchenette, a business center, a fitness center and an outdoor pool and spa area. The property additionally features 497 parking spaces, an aggregate

Colorado Springs, COThe Oasis

Loan SnapshotSeller



$39.7Loan psf/Unit





1.21xDBRS Refi DSCR



8.0%

Competitive SetMultifamily, Large, CO,



$78,993


$39.7Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$39.7






THE OASIS – COLORADO SPRINGS, CO

parking ratio of nearly 2.0 spaces per unit. In-unit amenities include balcony or patio areas with fireplaces and/or attached garages in select units.

COMPETITIVE SET



Eagle Ridge Apartment Homes Colorado Springs, CO 5.2 miles 216 1983 98.0%

Whispering Hills Colorado Springs, CO 4.6 miles 216 1984 97.0%

Advenir at Spring Canyon Apartments Colorado Springs, CO 3.0 miles 292 1996 94.0%

Camelback Pointe Apartment Homes Colorado Springs, CO 1.1 miles 258 1997 95.0%

Grand Centennial Apartments Colorado Springs, CO 3.2 miles 392 1996 94.0%

The Flats at Pinecliff Colorado Springs, CO 3.2 miles 196 1971 95.0%

The Oasis Colorado Springs, CO n/a 252 1998/2018 94.0%

Source: Appraisal.

The appraisal identified six competitive multifamily properties, all of which are of more dated vintage than the subject collateral but exhibit strong occupancies ranging from 94.0% to 98.0%. At the time of DBRS inspection, management indicated the collateral’s two predominant competitors included Advenir at Spring Canyon Apartments and Grand Centennial Apartments. Management further indicated that both competitive properties offered similar amenities, similar rents and equal finish qualities to the subject collateral.

Per Reis, only 26 units are forecasted to be constructed and 32 units absorbed annually across the collateral’s Northwest submarket over the five-year period ending December 2022, a construction/absorption ratio of 0.8 compared to the annualized construction/absorption ratio of 1.7 reported across the submarket for the five-year period ending December 2017. Annual inventory growth across the collateral’s submarket averaged 1.9% for the five-year period ending December 2017 and is forecasted to average 0.6% over the five-year period ending December 2022. Comparatively, annual inventory growth across the greater Colorado Springs MSA averaged 1.3% for the five-year period ending December 2017 and is forecasted to average 1.0% over the five-year period ending December 2022. Reis further reported an average submarket vacancy rate of 5.3% with properties constructed between 1990 and 1999 such as the collateral also exhibiting an average vacancy rate of 5.3%. As of Q2 2018, properties constructed between 1990 and 1999 accounted for the largest representation (33.0%) of submarket inventory.

SPONSORSHIPThe sponsor for this transaction is an integrated real estate investment, management and development company with a portfolio of over 140 properties across the United States and Mexico valued at approximately $2.8 billion. The sponsor is additionally a repeat Freddie Mac borrower, having closed over 70 transactions valued at $1.9 billion in aggregate since 2004. The non-recourse carveout guarantor for this transaction is one of the sponsor’s three public, non-listed REITs with a reported net worth and liquidity of $410.8 million and $26.7 million, respectively, as of March 2018. The guarantor reported ownership interests in 34 properties across 11states as of March 2018.

The property is managed by a borrower-affiliated management company for a contractual management fee equal to 3.0% of EGI. The management company reported management interests in 37,357 units across 19 states, inclusive of 2,804 units in the local area.




DBRS ANALYSISSITE INSPECTION SUMMARYDBRS toured the interior and exterior of the property on Friday, October 5, 2018, at approximately 9:00 a.m. Based on the site inspection, DBRS found the property quality to be Average.

The collateral consists of a 252-unit garden-style multifamily development located 70 miles south of Downtown Denver in Colorado Springs. The collateral is situated along Furnham Point, which serves as a roundabout interior roadway accessible via two gated access points along Grand Vista Circle. The property is flanked on its northwestern-most boundary by West Fillmore Street, which serves as a commercial corridor to the surrounding area and provides modest visibility to the subject. West Fillmore Street also provides access to I-25, which serves as a primary north-south arterial providing transit between the subject and Downtown Denver. The collateral is predominantly bounded by vacant land, though it borders an additional multifamily community located directly adjacent to the southwest and a vacant land parcel located directly adjacent to the northeast was under development at the time of DBRS inspection. Per management, the vacant lot under development is a 90-unit multifamily community set for delivery in 2020. The collateral further benefits from proximity to Coronado High School and various medical office facilities located directly adjacent to the west, as well as a King Soopers grocery-anchored retail center located 0.7 miles northeast along West Filmore Street.

Per management, the collateral was approximately 89.3% at the time of inspection with no concessions being offered. Management indicated the occupancy drop was partially a result of nine units (3.6% of total units) being offline for renovation work. Unit renovations were completed on all but the nine offline units, with renovated one-bedroom and two-bedroom units achieving average monthly rent premiums of $110 and $140 per unit, respectively. Per management, the unit renovations are completed in approximately 20 days and renovated units have historically leased prior to completion of renovation work.

Originally constructed in 1998, the collateral is comprised of 17 three-story buildings featuring beige stucco exteriors accentuated by clay-red trim and pitched-shingle roofing. The collateral features an on-site leasing office, which has a tenant lounge area with a small kitchenette and lush seating arrangements, a cozy business center and a well-landscaped outdoor pool and spa area complete with extensive pool-side seating and a grilling area. Renovated units featured appealing black/steel appliances accentuated by white cabinetry and white/grey granite countertops with carpeted floors throughout all bedrooms and common areas. All units benefited from modern, open kitchen-family room layouts, and select units additionally featured fireplaces, attached garages and/or patio/balcony areas. Additionally, all units had full-size in-unit washer and dryer machines. The community’s exterior was nicely accentuated by an abundance of mature and generally well-maintained landscaping, and only minor cracking was noted throughout most parking areas. Overall, DBRS found the property to be appealing and generally well maintained at the time of inspection.




DBRS NCF SUMMARY

NCF ANALYSIS


Variance

GPR $3,365,030 $3,595,571 $3,960,608 $4,079,335 $4,139,851 $4,139,851 0.0%

Other Income $404,955 $411,481 $411,840 $432,822 $432,822 $432,822 0.0%


EGI $3,559,364 $3,810,732 $4,115,272 $4,255,054 $4,282,884 $4,255,054 -0.6%

Expenses $1,104,812 $1,116,500 $1,128,509 $1,144,637 $1,225,911 $1,296,382 5.7%

NOI $2,454,552 $2,694,232 $2,986,763 $3,110,417 $3,056,973 $2,958,672 -3.2%

Capex $0 $0 $0 $0 $61,236 $63,000 2.9%

NCF $2,454,552 $2,694,232 $2,986,763 $3,110,417 $2,995,737 $2,895,672 -3.3%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $2,895,672, a -3.3% variance from the Issuer’s NCF of $2,995,737. The primary drivers of the relatively minimal variance included vacancy, management fees and utility expenses. DBRS estimated a 7.4% economic vacancy loss, which resulted in an NRI in-line with the reported NRI for the T-12 period ending May 2018. The Issuer estimated a 7.0% economic vacancy loss and arrived at an NRI generally between the appraisal and T-12 period ending May 2018. DBRS additionally applied management fees equal to 4.0% of EGI compared to the Issuer’s estimated 3.0% and set utility expenses equal to the borrower’s budgeted amount.

DBRS VIEWPOINTThe property is well located within a well-performing suburban residential market, as evidenced by a Reis-reported average submarket vacancy rate of 5.3% and appraiser-identified competitive property occupancies ranging from 94.0% to 98.0%. While new supply was noted to be under construction directly adjacent to the collateral’s northeast at the time of DBRS inspection, Reis forecasted an average annual inventory growth of only 0.6% across the collateral’s submarket over the five-year period ending December 2022. Additionally, the subject’s vintage is generally consistent with the surrounding submarket as properties constructed between 1990 and 1999 accounted for approximately 33.0% of submarket inventory as of Q2 2018. The property has benefited from over $2.7 million ($10,909 per unit) in capital improvements since 2014, enhancing interior appeal and allowing the collateral to remain competitive with management-identified market competitors such as Advenir at Spring Canyon Apartments and Grand Centennial Apartments. The collateral further benefits from experienced property management, having maintained an annual economic occupancy in excess of 93.0% since 2015 while simultaneously raising monthly rents by $110 to $140 per unit through ongoing renovations.

DOWNSIDE RISKS• The loan is structured with a five-year IO term and returned approximately $11.5 million of cash equity to the sponsor at

closing. As a result, the loan exhibits elevated refinance risk evidenced by a relatively low DBRS Exit Debt Yield and DBRS Refi DSCR of 8.0% and 0.86x, respectively.

STABILIZING FACTORS• As of loan closing, the borrower retained over $2.9 million of cash equity in the transaction and has added significant

value since acquisition. Furthermore, the sponsor is a repeat Freddie Mac borrower, having closed over 70 transactions valued at nearly $1.9 billion in aggregate since 2004 with all loans paid as agreed.



COLLATERAL SUMMARY


City, State Ft. Myers, FL Physical Occupancy 94.5%

Units 397 Physical Occupancy Date July 2018

The loan is secured by the borrower’s fee interest in The Fountains at Forestwood, a 397-unit, garden-style multifamily development located in Fort Myers, Florida, approximately 7.0 miles from the CBD. The subject was originally constructed in 1985, and most recently renovated in 2016, and consists of 27 two-story buildings that were 94.5% occupied as of the July 2018 rent roll. Loan proceeds of approximately $38.2 million, along with a cash equity contribution from the sponsor in the amount of approximately $16.8 million, were used to acquire the collateral for a purchase price of $55.0 million, fund upfront reserves and pay down closing costs associated with the transaction. The ten-year fixed-rate loan has an initial five-year IO period before amortizing over a 360-month schedule.

The collateral benefited from $6.3 million ($15,869/unit) in capital investment by the seller starting in 2015, which financed interior renovations, paint, landscaping, building upgrades, appliance replacement, flooring upgrades, pavement repairs, clubhouse renovation work, new signage, pool repairs, office renovation work and door/blind replacement. Per management, approximately 320 of the units received the full upgrades and are receiving rent premiums around $100 a month. The unrenovated units comprise approximately 20.0% of the property and were lacking upgraded appliances, finished and in-unit washer/dryer capabilities. The subject’s unit breakdown consists of 224 one-bedroom units averaging 665 sf and 173 two-bedroom units averaging 859 sf, including several new loft-style units which are in high demand. Per the July 2018 rent roll, the subject’s one- and two-bedroom units rent for an average monthly rate of $1,036/unit and $1,196/unit, respectively. The subject’s amenities include a swimming pool, fitness center, clubhouse, business center, picnic area, racquetball court, tennis court, playground, car wash station and pet park. Additionally, the property features a large interior walkway with several waterways and 714 parking spaces around the

Fort Myers, FLThe Fountains At Forestwood

Loan SnapshotSeller



$38.2Loan psf/Unit





1.19xDBRS Refi DSCR



8.2%

Competitive SetMultifamily, Large, FL,



$56,875


$38.2Pari Passu

$0.0B-Note

$0.0Mezz

$7.5Total Debt

$45.7






THE FOUNTAINS AT FORESTWOOD – FORT MYERS, FL

exterior perimeter, representing an aggregate parking ratio of nearly 1.8 spaces per unit. Apartment units feature fully-equipped kitchens, in-unit washer and dryer and private porches.

COMPETITIVE SET


Subject UnitsYear

Built/Renovated Occupancy

Laurels @ Edison Ft. Myers, FL 4.0 miles 240 1972 96.0%

Brantley Pines Ft. Myers, FL 0.3 miles 296 1987 97.0%

Gulf Stream Isles Ft. Myers, FL 2.9 miles 936 1988 92.0%

The Retreat at Vista Lake Ft. Myers, FL 5.7 miles 640 1991/2010 93.0%

The Fountains at Forestwood Ft. Myers, FL n/a 397 1985/2016 94.5%

Source: Appraisal.

The appraiser identified four multifamily properties within the subject’s local market that best compete with the property, all of which are of a relatively similar vintage than the collateral. Although the Ft. Myer multifamily market is broken out into distinct submarkets, per the management meeting conducted, the competitive set is situated within an older community that is separate from the modern luxury apartments that are being completed to the south, closer to the beaches and large commercial developments. All competitive properties identified by the appraisal boasted strong occupancy figures ranging from 92.0% to 97.0%. Per Reis, Ft. Myer’s overall market vacancy is 6.0% and 5.2% for the subject’s vintage and population growth in 2017 was 2.3%, making it among the country’s top-15 fastest growing MSAs. Driven by an influx of senior citizens and retirees, net migration is expected to rise steadily over the next few years, as warm weather, affordable living costs and the tourism industry attract and support visitors and job growth. This healthy migration and the relatively low living costs are expected to keep the market going with occupancy forecasted to remain above 92.0% through 2022 and rents projected to increase by 2.6% on average, per Reis.

SPONSORSHIPThe sponsor and carveout guarantor of the loan is a disciplined and highly-specialized real estate development and management firm that focuses solely on multifamily growth opportunities in Texas, Florida and the East Coast. The sponsor has had a long career in real estate development starting in 1983, and has constructed over 40 apartment complexes (approximately 5,000 units) and 20 post office facilities. He currently serves as the CEO and Chairman of his respective company and has closed 12 prior Freddie Mac transactions all of which have performed as agreed. Additionally, the sponsor maintains a net worth and liquidity of $31.7 million and approximately $2.6 million, respectively.

The property is managed by a borrower-controlled company formed to run the day-to-day operations. The management company oversees their developments throughout the investment and ownership process. The management company has been active for over 30 years and currently manages 22 properties (3,997 units) including 11 (1,826 units) in Florida.




DBRS ANALYSISSITE INSPECTION SUMMARYDBRS toured the interior and exterior of the property on Tuesday, October 9, 2018, around 1:30 p.m. Based on site inspection and meeting conducted with management, DBRS found the property to be Average.

The collateral consists of a 397-unit, garden-style apartment complex located 7.0 miles south of the Ft. Myers CBD and 10.8 miles northwest of the Ft. Myers Beach. The property is situated just west of S. Cleveland Avenue on Brantley Road, a local commercial route which was busy at the time of inspection. The asset is serviced well by S. Cleveland Avenue and lies less than 5.0 miles from I-75, connecting to multiple state highways and providing access to Miami to the east and to Tampa Bay/St. Petersburg to the north. Brantley Road offers the subject good frontage however, its visibility is limited and the property feels constrained by the lack of open space between the improvements and the subject’s boundaries. The surrounding vicinity was moderately infilled, with many older vintage apartment complexes, single-family homes and convenience retail strips in the immediate area. Most commercial developments consist of large shopping centers, restaurants, malls and office spaces to support Ft. Myers’ relatively large concentration of senior citizens and retirees. Compared with the other multifamily product seen in the market, the subject was slightly inferior due to the older vintage and lack of curb appeal. However, over 40% of the Ft. Myer multifamily market was built before 1989 (equal or older vintage as the collateral) and the subject showed well compared to the competing developments seen adjacent to it.

The improvements were originally constructed in 1985 and most recently renovated in 2016, consisting of 27 two-story buildings spread across a 39.6-acre lot. Entrance to the collateral could be accessed by a one-way road with a single entry/exit leading the leading office, pool and fitness center. Other common amenities featured at the asset included a racquetball court, tennis court, pet park, car wash center, picnic areas and playground. The grounds of the subject were well-maintained and welcoming at the time of inspection, however the lack of multiple paved routes limits the ability of residents to quickly enter and exit the property. There was a single, continuous driveway that traverses alongside the outer perimeter of the property and connects to individual parking lots for the various units. Per the Zoning Report, the property is deficient by 159 spaces, at the time of inspection however there appeared to be ample parking for the residents. The buildings contained shared front ingress/egress points off their respective parking lots and private back porches leading to open grass areas and waterways located in the interior of the complex’s layout. The exterior facade was comprised of teal wood frame buildings with faded grey brick siding exteriors and pitched shingle roofs.

DBRS toured a model two-bed, a single-bed and two-bed loft-style unit at the time of the inspection. The unit mix consists of one- and two-bedroom apartments in six various layouts. The overall average net unit size is 749 sf which is at the low end of the range indicated by the comparables. Interior amenities include large walk-in closets, washer/




dryer in most units, faux wood flooring and vaulted ceilings. Kitchens are fully equipped with solid surfaced counters, refrigerator, microwave oven and range/oven. The 2015 renovations included new appliances, new carpet and vinyl and new countertops in most units. The inspected units were adequately sized and clean at the time of inspection, finished light grey and white interiors. Of note, there was some deferred maintenance notice at the vacant units at the time of inspection. Per management, this was due to the prior owner’s negligence in upkeep and current management presented a wish list during the tour of several outstanding items that were in progress to get the few remaining units ready for leasing. Apart from these minor repairs, deferred maintenance was limited to striping and paving of the lots throughout the premises and trimming some of the overgrown foliage.

DBRS NCF SUMMARY

NCF ANALYSIS

2016 2017 T-12 April 2018 Issuer NCF DBRS NCFNCF

Variance

GPR $4,635,269 $5,135,235 $5,164,039 $5,266,656 $5,266,656 0.0%

Other Income $553,607 $540,099 $550,348 $550,348 $550,348 0.0%

Vacancy & Concessions ($651,337) ($619,632) ($552,938) ($521,049) ($655,555) 25.8%

EGI $4,537,539 $5,055,702 $5,161,449 $5,295,955 $5,161,449 -2.5%

Expenses $1,951,854 $2,046,828 $2,077,706 $2,126,817 $2,201,164 3.5%

NOI $2,585,685 $3,008,874 $3,083,743 $3,169,138 $2,960,285 -6.6%

Capex $0 $0 $0 $59,550 $82,708 38.9%

NCF $2,585,685 $3,008,874 $3,083,743 $3,109,588 $2,877,577 -7.5%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $2,877,577, representing a -7.5% variance from the Issuer’s NCF of $3,109,588. The primary drivers of the variance included vacancy, operating expenses and management fees. DBRS estimated a 12.4% economic vacancy loss (inclusive of concessions and bad debt) on the property, which was supported by the average economic vacancy loss exhibited at the subject and resulted in an NRI in-line T-12 period ending April 2018. By comparison the Issuer estimated a 9.9% economic vacancy loss. This figure was inclusive of bad debt and concessions. The Issuer assumed physical vacancy at 7.5% which is slightly above the Reis data for the submarket of 6.0% and lower than the appraiser’s estimate of 8.0%. For the management fee, DBRS assumed 4.0% of EGI while the Issuer estimated a 3.0% fee based off the in-place contractual rate. DBRS set operating expenses of payroll, R&M, utilities and G&A expenses equal to the T-12 reported figures inflated by 3.0%.

DBRS VIEWPOINTThe property is well-located within a stable and growing suburban community of Ft. Myers and benefits from its proximity to several nearby local demand drivers including Edison Mall, Lee Memorial Hospital, Page Field and Florida SouthWestern State College. While the subject is of an older vintage and exhibits sub-standard curb-appeal compared to the general Ft. Myers market, almost 40% of the total inventory was built prior to 1989. There is no new increase in inventory projected by Reis and per the management tour conducted, all the proposed projects in the pipeline are modern luxury apartments with fully upgraded amenity packages located closer to the beaches and therefore would not compete with the subject. Additionally, Ft. Myers is one of the top-15 fastest growing MSAs in the nation and the healthy migration and lower cost of living will continue to attract visitors, senior citizens and job seekers over the near future. The average and median household income within a five-mile radius of the subject is $75,638 and $50,489, respectively. The property’s average rent represents only 17.5% of average income and 26.3% of median income. According to data published by the Joint Center for Housing Studies of Harvard University, in 2016 51.6% of apartment residents were cost burdened, meaning they were spending greater than 30.0% of their income on housing. Although the subject is of older vintage, prior ownership spent




approximately $6.3 million on capital improvements since September 2015 and it has been well-maintained compared with the neighboring multifamily developments seen during the site inspection. Since 2016, cash flow at the property has risen nearly 19.0% following the completed renovation. With the popularity of the new loft-style units being offered the subject and the installation of upgraded AC units and appliances being completed around the property, it is well-positioned to capitalize on the projected market growth.

DOWNSIDE RISKS• The loan has an initial five-year IO and exhibits moderate refinance risk, as evidenced by a relatively low DBRS Exit Debt

Yield and Refi DSCR of 8.2% and 0.88x, respectfully.

• The borrower entered into a Preferred Equity Structure in the amount of $7.5 million, which may limit the free cash flow of the borrower to reinvest into the property.

STABILIZING FACTORS• The borrower contributed approximately $16.8 million of cash equity to the transaction at loan closing. The property

recently underwent a renovation in which rents were raised and there is likely to be additional revenue increases captured in the near term as a result of finishing some of the renovation work. Additionally, no new supply is projected in the immediate submarket.

• The Preferred Equity is not secured by the real estate and essentially acts like mezzanine debt and the Issuer has ensured that the structure conforms to the Freddie Mac Loan Agreement, which protects the first lien position.



COLLATERAL SUMMARY

DBRS Property Type Multifamily Year Built 2014

City, State Katy, TX Physical Occupancy 96.9%

Units 351 Physical Occupancy Date July 2018

The loan is secured by the borrower’s fee simple interest in Vista at Grand Crossing, a 351-unit multifamily property located in Katy, Texas, 27 miles west of the Houston CBD. The garden-style complex was built in 2014 and comprises 15 buildings. As of July 2018, the property’s physical occupancy was 96.9%. The acquisition of Vista at Grand Crossing was funded by loan proceeds of $37.2 million in addition to $16.5 million of borrower equity. The ten-year loan is structured with a five-year IO period and amortizes over a 30-year schedule.

The property’s common area amenities include a resort-style pool, a fitness center, a yoga/spinning room, a tanning salon, a bocce ball court and a dog park, among others. Unit amenities include stainless-steel appliances, quartz countertops, ceramic tile backsplash, pendant lighting, in-unit washers/dryers, walk in closets, alarm systems and patios/balconies. Select units also include direct-access garages. The unit mix at the property consists of 202 one-bedroom units (777 sf ), 115 two-bedroom units (1,252 sf ) and 34 three-bedroom units (1,635 sf ). According to Reis data, these units are larger than the average size of units in the submarket which are 753 sf, 1,095 sf and 1,402 sf, respectively. Average historical vacancy at the property ranged from 8.47% to 34.56% between YE2016 and YE2017 due to the lease up period of the property after it was constructed in 2014. The property’s 96.9% occupancy rate is outperforming the submarket which reports a 6.7% vacancy rate according to Reis.

Katy, TXVista at Grand Crossing

Loan SnapshotSeller



$37.2Loan psf/Unit





1.09xDBRS Refi DSCR



7.3%





$37.2Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$37.2






VISTA AT GRAND CROSSING – KATY, TX

The appraisal identified six multifamily properties in the local market and within the same vintage as the subject. Refer to the table below for information on how the subject compares with the competitive set.

COMPETITIVE SET


Subject Units Year Built OccupancyAvg. Unit

SizeAvg. Rent per Unit

Sorrel Grand Parkway Katy, TX 1.2 Miles 380 2015 94.0% 1,152 $1,375

The Crossing at Katy Ranch Katy, TX 2.4 Miles 318 2015 96.0% 1,175 $1,645

The Cape at Grand Harbor Katy, TX 1.8 Miles 324 2014 94.0% 989 $1,245

The District at Westborough Katy, TX 5.0 Miles 340 2014 90.0% 1,040 $1,141

The Grand at LaCenterra Katy, TX 3.4 Miles 271 2015 94.0% 979 $1,713

Parkside Grand Parkway Katy, TX 1.4 Miles 354 2014 92.0% 865 $1,244

Villas at Grand Crossing Katy, TX n/a 351 2014 96.9% 1,016 $1,293

Source: appraisal, distance from subject google maps.

SPONSORSHIPThe guarantor for this transaction is the owner and co-founder of a property management firm that owns and operates residential communities in nine states. The portfolio of the firm is valued in excess of $2.0 billion and contains over 13,000 units. The guarantor is a repeat Freddie Mac borrower, having completed 32 deals. The guarantor has performed as agreed. No material credit or litigation issues were noted for the borrower. The complex is managed by a borrower-affiliate management company for a contractual fee of 2.5%. The firm manages over 7,000 units within the state of Texas.

DBRS NCF SUMMARY

NCF ANALYSIS

2016 2017 T-12 June 2018 Issuer NCF DBRS NCFNCF

Variance

GPR $6,027,746 $6,171,366 $6,194,936 $6,255,300 $6,255,300 0.0%

Other Income $374,185 $571,459 $611,125 $611,125 $611,125 0.0%

Vacancy & Concessions ($2,495,799) ($1,359,087) ($1,295,109) ($1,412,484) ($1,429,275) 1.2%

EGI $3,906,132 $5,383,738 $5,510,953 $5,453,941 $5,437,151 -0.3%

Expenses $2,228,612 $2,949,437 $2,839,738 $2,524,413 $2,862,475 13.4%

NOI $1,677,520 $2,434,301 $2,671,215 $2,929,528 $2,574,676 -12.1%

Capex $0 $0 $0 $83,187 $87,750 5.5%

NCF $1,677,520 $2,434,301 $2,671,215 $2,846,341 $2,486,926 -12.6%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $2,432,474, a -14.5% variance from the Issuer’s NCF of $2,846,341. The main drivers in the NCF variance were the operating expenses and the management fee representing 74% and 20% of the variance, respectively. DBRS generally assumed T-12 operating expenses inflated by 3%, with the exception of utilities and payroll in which budgeted amounts were assumed due to new ownership. Additionally, DBRS used a 4% management fee in comparison to the Issuer, who assumed the 2.5% contractual rate to the borrower-affiliated management company.




DBRS ANALYSISSITE INSPECTION SUMMARYBased on the DBRS site inspection and management meeting conducted on October 2, 2018, DBRS found the property quality to be Above Average.

Vista at Grand Crossing is a 351-unit gated Class A garden-style multifamily development located in Katy, off of Cobia Drive. The subject is accessible by I-10 and the Grand Parkway, both of which are heavily trafficked major thoroughfares. Although the property does not benefit from frontage in regard to visibility from the interstate, by being set farther back, the subject is secluded from street noise. The area directly surrounding the site is primarily commercial with some residential multifamily. Both Costco and Walmart Supercenter are within five minutes from the property. Additionally, there are multiple restaurants, retail and entertainment options nearby with some vacant land left for future development in the immediate vicinity. The property was built in 2014 and is well maintained with no visible deferred maintenance. At the time of inspection, the property was 93% occupied and not offering any concessions. Management noted that current concessions offered in the market by comparable properties are typically one-month rent-free. The subject has an aesthetically pleasing leasing center at the main entrance which features high ceilings and modern furniture and fixtures. The leasing office is connected to the business center/resident lounge area which was well laid-out and inviting with work stations, multiple televisions, shuffle board and a large coffee bar. Other property amenities include a large gym, a yoga room, a dog park and a resort-style pool with cabanas and an outdoor grilling station. The property currently has a tanning room as an amenity, but management noted on the tour they plan to convert it to a package-delivery room as it is primarily unused by current residents. Unit amenities include stainless steel appliances, quartz countertops, ceramic tile backsplash, kitchen islands, ceiling fans, vinyl plant flooring, walk-in closets, alarm systems, in-unit laundry and balcony/patios. Select units feature attached garages. Overall, DBRS found the property to be well maintained and to have excellent amenities at the time of inspection.




DBRS VIEWPOINTThe collateral is located in Katy with superior access via I-10 and the Grand Parkway. Furthermore, the “Energy Corridor,” with companies such as BP, Shell, Schlumberger, Conoco Philips and Transocean, is just 8.9 miles away from the subject directly off of I-10. Non-energy businesses and employers in the area include Geico, Amazon and the Katy Independent School District. Per Reis Q2 2018, occupancy in the submarket was 93.3% and is forecast to average 93.1% through 2022. Additionally, Reis projects that during that time period 272 units will be delivered with a positive 202-unit absorption, resulting in a construction to absorption ratio of 1.3.

The project’s top competitor is located just down the street and benefits from frontage on the Grand Parkway. Additionally, the top competitor was built in 2016 and offers slightly superior amenities. The subject does appear to be performing well within its competitive set in terms of occupancy and the absence of concession offerings. The property is in excellent physical condition, given its new vintage, and offers modern amenities increasing the appeal to tenants. Furthermore, the transaction also benefits from strong sponsorship, with a repeat Freddie Mac borrower who has had great success in real estate investment as evidenced by his ownership in 50 multifamily properties.

DOWNSIDE RISKS• Low historical occupancy.

• Five-year IO period. The loan has refinance metrics consisting of DBRS Exit Debt Yield and DBRS Refi DSCR of 7.13% and 0.77x, respectively.

STABILIZING FACTORS• Current occupancy is 93%. Prior to the sponsor acquiring the subject, the property had gone through four previous

management companies, which is a large number considering the property was built in 2014. The current management in place is sponsor affiliated. The principals of the management company have over 25 years of experience in the real estate industry. Currently, they manage 13,000 units across the United States with over 7,000 units in the State of Texas.

• The Sponsor contributed $16.5 million, representing 30.7% of the total cost basis.



COLLATERAL SUMMARY


City, State Beaverton, OR Physical Occupancy 94.8%

Units 248 Physical Occupancy Date September 2018

This loan is secured by the borrower’s fee interest in Birch Pointe, a 248-unit garden-style multifamily property located in Beaverton, Oregon, approximately 8.0 miles northwest of Downtown Beaverton and 12.5 miles west of Portland. The subject features 19 three-story buildings, including a clubhouse, across a 16.3-acre parcel. The property was 94.8% physically occupied per the rent roll dated September 2018. Loan proceeds of $34.7 million refinanced approximately $16.5 million of existing debt, returned $17.9 million to the sponsor and covered closing costs. The ten-year loan is fully IO through the loan period.

The property was originally built in 1989 and was acquired by the borrower in 2008 for $24.5 million. Following acquisition, the borrower completed renovations that were mainly maintenance focused in nature toward exterior improvements, roof replacement and minor unit upgrades. The property is currently undergoing a large-scale renovation spanning each unit that will upgrade countertops, appliances, flooring and lighting. The subject’s unit mix consists of eight studio units averaging 475 sf, 75 one-bedroom units averaging 692 sf, 109 two-bedroom units averaging 996 sf and 56 three-bedroom units averaging 1,205 sf. Per the July 2018 rent roll, the collateral’s one-, two- and three-bedroom units achieved average monthly rents of $1,149, $1,343 and $1,530 per unit, respectively. The studio units, which the property manager noted as the most popular unit type, have an average rental rate of $1,079 per unit. Common area amenities at the subject include a clubhouse, which features the leasing office; an outdoor pool, fitness room; a racquetball court; a sauna; a laundry room; and a business center. The property additionally features 408 parking spaces, a parking ratio of nearly 1.65 spaces per unit. In-unit amenities include fireplaces, washer/dryer units, ceiling fans, walk-in closets, patio/balcony areas and vaulted ceilings for certain units.

Beaverton, ORBirch Pointe

Loan SnapshotSeller



$34.7Loan psf/Unit





1.58xDBRS Refi DSCR



6.8%

Competitive SetMultifamily, Medium, 970




$34.7Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$34.7






BIRCH POINTE – BEAVERTON, OR

The appraiser identified six multifamily properties within the local market that compete with the subject, all of which are of similar vintage and unit count to the collateral. All competitive properties identified by the appraisal have strong occupancy figures ranging from 93.0% to 99.0%. The appraiser noted that the supply of multifamily units in the area is active; however, there are limited opportunities for additional expansion beyond what is already in process or identified due to the limited supply of land. Per Reis, 700 units are forecasted to be constructed and 461 units absorbed through the end of the year in the collateral’s Beaverton submarket. By 2020, Reis projects vacancy rate to rise and then stabilize at a level of 4.0%, which is slightly above the current level of 3.9%. The rise will account for new construction being introduced to the market, which is projected at approximately 1,790 units, accounting for 5.2% of current inventory. Reis also reported an average submarket vacancy rate of similar vintage of 2.5% for Q2 2018, further exhibiting the strong submarket metrics for multifamily.

COMPETITIVE SET



King's Court Beaverton, OR 1.5 Miles 460 1990 95.0%

Cambridge Crossing Apartments Beaverton, OR 1.6 Miles 251 1997 99.0%

Orenco Gardens Hillsboro, OR 2.9 Miles 264 2004 98.5%

Emerald Place Apartments Beaverton, OR 0.1 Miles 350 1990 94.0%

Commons at the Verandas Hillsboro, OR 1.3 Miles 496 1996 94.8%

Elmonica Court Beaverton, OR 1.7 Miles 144 1997 93.2%

Birch Pointe Beaverton, OR n/a 248 1989 94.8%

Source: Appraisal.

SPONSORSHIPThe sponsor for this transaction is a privately held real estate firm which specializes in acquisitions, development and management of residential and commercial properties. The key sponsors have extensive experience in real estate investment since 1993, specifically on properties in the Western United States. As of June 30, 2018, the guarantors have a combined reported net worth and liquidity of $478.2 million and $97.7 million, respectively. Property management is provided by a borrower-affiliated management company for a contractual fee equal to 3.0% of EGI. The borrower-affiliated management company reported management interests in 9,271 units in California, Oregon and Washington and approximately 7,100 units in the Portland metro area.




DBRS ANALYSISSITE INSPECTION SUMMARYDBRS toured the interior and exterior of the property on Thursday, October 4, 2018, at 1:00 p.m. Based on the site inspection, DBRS found the property quality to be Average.

The subject collateral is a 248-unit garden style multifamily complex located in Beaverton. Originally built in 1989, the property is well located in an established suburban community in the larger Portland MSA. The property is accessed via Cornell Road, a neighborhood arterial that runs east-west. The subject is nestled between two neighboring apartment complexes, The Lakes Apartments and Emerald Place Apartments. Located west of the property on Cornell Road is a retail corridor that includes Tanasbourne Village, Tanasbourne Town Center and The Streets of Tanasbourne. Popular stores within these centers include Macy’s, Best Buy, Target, Trader Joe’s, Nordstrom Rack, Banana Republic, Marshalls, Ross Dress for Less, Starbucks and many more. Major employers in the area include Nike, Intel, Providence and Kaiser Permanente. Nike has a large presence in the area, which includes their international headquarters located 2.0 miles east of the property. The company’s campus sprawls 270 acres across 35 buildings and employs over 8,500 employees. According to management, many of the residents at the subject work in the local area as well as in downtown Portland, which is approximately a 30-minute drive via U.S. Route 26.

The property spans 25 buildings across 16.3 acres. The three-story buildings are composed of wood frame with wood siding. Accessibility to the subject is average, as there is only one entrance that leads in/out of the complex on Cornell Road. The property exhibits average curb appeal, with decent signage on the main road. However, the location of the subject is favorable due to the location of the complex within the market and close proximity to retail developments and major employers. The property features a clubhouse, which includes the leasing office; an outdoor pool; a fitness room; and a racquetball court. The property manager noted that the clubhouse will be receiving a full upgrade next year, which will include a new fitness center and upgrades to the pool. The subject has ample parking, with approximately 408 parking spaces (1.65 spaces per unit). The unit mix at the property includes one-, two- and three-bedroom units, as well as studio units. Units were found to be adequately sized for their appropriate room count. The property is currently undergoing a large renovation, which covers interior renovations consisting of new appliances, countertops, cabinetry, doors, flooring and carpeting as well as exterior upgrades to common areas and landscaping. Per the property manager, units are being renovated as they turn and only 50% of the units have been renovated so far. The manager also noted that the property has realized rent premiums on renovated units of approximately $100 to $125 per unit. The studio units are not part of the renovation. DBRS toured two units at the property: a vacant renovated unit and model unit. Unit interiors were found to be spacious and include a living room, bedroom and dining area. The kitchen features black granite countertops, stainless-steel appliances and wood laminate flooring that also covers the bathroom and entry way. The living room, bedroom




and dining areas are carpeted. Each unit has either a deck or a patio with a storage closet. All units excluding the studio units also include fireplaces. Units on the top floors also feature vaulted ceilings. Overall, the property was found in good condition with no deferred maintenance visible.

DBRS NCF SUMMARY

NCF ANALYSIS


Variance

GPR $3,131,431 $3,504,619 $3,776,528 $3,866,504 $3,922,212 $3,922,212 0.0%

Other Income $316,265 $363,215 $393,838 $416,045 $416,045 $416,045 0.0%


EGI $3,319,490 $3,693,681 $3,955,237 $4,043,379 $4,142,146 $4,042,549 -2.4%

Expenses $1,382,017 $1,432,826 $1,520,395 $1,586,710 $1,500,444 $1,613,656 7.5%

NOI $1,937,473 $2,260,855 $2,434,842 $2,456,669 $2,641,702 $2,428,894 -8.1%

Capex $0 $0 $0 $0 $49,600 $54,657 10.2%

NCF $1,937,473 $2,260,855 $2,434,842 $2,456,669 $2,592,102 $2,374,237 -8.4%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $2,333,836, representing a -10.0% variance from the Issuer’s NCF of $2,592,103. The primary drivers of the variance include operating expenses, vacancy rate and management fee. DBRS based operating expenses by inflating expenses reported for the T-12 period by 3.0%. DBRS estimated a vacancy rate of 6.5% that results in an NRI figure in line with the T-12 period ending May 2018. The Issuer and appraiser concluded to a vacancy rate of 5.0% and 5.50%, respectively. DBRS estimated management fees equal to 4.0% of EGI, representing a $58,148 variance from the Issuer’s concluded management fees of 2.5% of EGI (sponsor-affiliated contractual is 3.0%).

DBRS VIEWPOINTThe subject benefits greatly from a favorable location within a well-established neighborhood in Beaverton, Oregon. The property is proximate to popular retail outlets as well as major employers, including Nike, which is headquartered approximately 2.0 miles away from the complex. The Beaverton metro area is performing very well, with a 3.9% vacancy rate amongst multifamily properties, according to Reis. When drilling down to vintage, the vacancy rate drops down to 2.5%. The appraiser also identified six comparable properties that display an average vacancy rate of 4.3%. Built in 1989, the subject is currently undergoing renovations, which are primarily focused on interior renovations that are commencing as units turn. Renovated units include new granite countertops, stainless steel appliances, cabinetry, flooring and carpeting, amongst others. Based on the DBRS site inspection, the renovated units were found to be in good condition and will definitely increase the appeal of the property. Per the property manager, renovated units are already achieving premiums of $100 to $125 per unit. The borrower has shown commitment to the property by putting in a total of $4.0 million of capital expenditures into the property since it was acquired in 2008. The renovations are favorable not only because they will attract residents in an already attractive market but also because they will keep the property competitive with other local apartment communities. The subject is currently operating at an 93.8% occupancy rate, which is relatively in line with the market. However, given the new renovations, the property has upward potential that is supported by submarket metrics.

DOWNSIDE RISKS• The loan is structured as fully IO over a ten-year period. There is elevated refinance default risk as exhibited by a low

DBRS Exit Debt Yield of 6.72% and DBRS Refi DSCR of 0.72x.




STABILIZING FACTORS• The DBRS NCF assumes an 6.50% vacancy, which is in line with the T-12 period reported May 2018. The DBRS vacancy

rate is in line with the Reis submarket vacancy rate and the appraiser’s comparable vacancy rates. The property is well occupied in an established market and, assuming the property’s future in-unit renovations are likely to increase the property’s overall NCF, the DBRS Debt Yield and DSCRs could improve materially. While the is new construction projected in the market, those units rent for a premium of 16.0% over the subjects projected renovated units, thereby still providing a value to its residents.



COLLATERAL SUMMARY


City, State Lone Tree, CO Physical Occupancy 93.0%


This loan is secured by the borrower’s fee interest in Aspect, a 230-unit mid-rise multifamily complex located 19.4 miles south of Downtown Denver in Lone Tree, Colorado. Originally constructed in 2015, the collateral is comprised of a single five-story building and was 93.0% occupied per the rent roll dated June 2018. However, at the time of DBRS inspection in October 2018, management indicated that occupancy had fallen to approximately 87.9% during the transition in property ownership. Loan proceeds of $34.1 million in addition to a borrower equity contribution of nearly $28.6 million financed the sponsor’s $62.0 million acquisition of the property. The ten-year fixed-rate loan is full-term IO.

Originally completed in 2015 and stabilized in early 2017, the collateral’s unit breakdown consists of 11 studio units averaging 569 sf, 134 one-bedroom units averaging 741 sf and 85 two-bedroom units averaging 1,103 sf. Per the June 2018 rent roll, the collateral’s studio, one-bedroom and two-bedroom units achieved average monthly rents of $1,296, $1,449 and $1,810, respectfully. Common area amenities across the property include a clubhouse, a business center, a dog wash station, a wine room, a rooftop deck and a heated swimming pool open year-round. The property additionally features 349 parking spaces, representing an aggregate parking ratio of over 1.5 spaces per unit, inclusive of 338 garage spaces. In-unit amenities include stainless steel appliances, quartz countertops, vinyl wood flooring, full-size washer and dryer units, walk-in closets and terraces in select units.

Lone Tree, COAspect

Loan SnapshotSeller



$34.1Loan psf/Unit





1.97xDBRS Refi DSCR



8.3%

Competitive SetMultifamily, Medium, CO,



$75,000


$34.1Pari Passu

$0.0B-Note

$0.0Mezz

$0.0Total Debt

$34.1






ASPECT – LONE TREE, CO

COMPETITIVE SET


Subject Units Year Built Occupancy

AMLI Ridgegate Lone Tree, CO 0.4 miles 281 2013 94.0%

Westview at Lincoln Station Lone Tree, CO 0.4 miles 431 2006 85.0%

Marq at Ridgegate Lone Tree, CO 0.8 miles 243 2009 94.0%

Regency at Ridgegate Lone Tree, CO 0.8 miles 208 2010 96.0%

Ovation Lone Tree, CO 0.7 miles 190 2016 96.0%

Camden Lincoln Station Lone Tree, CO 0.5 miles 267 2017 96.0%

Lofts at Lincoln Station Lone Tree, CO 0.4 miles 101 2015 95.0%

Aspect Lone Tree, CO n/a 230 2015 93.0%

Source: Appraisal.

The appraisal identified seven multifamily properties within the local market that compete with the subject, all of which were of similar vintage to the subject collateral. All competitive properties identified by the appraisal boasted relatively strong occupancies ranging from 85.0% to 96.0%. At the time of DBRS inspection, management indicated that the collateral’s two most predominant competitors included Waterford Lone Tree (not listed above) and AMLI Ridgegate. Management further indicated that Waterford Lone Tree offered a better price-point concession than the collateral but was more dated, and that AMLI Ridgegate offered a similar amenities package and price point to the subject.

Per Reis 597 units are forecasted to be constructed and 548 units absorbed annually across the collateral’s Douglas County submarket over the five-year period ending December 2022, representing a construction/absorption ratio of 1.1 compared to the annualized construction/absorption ratio of 1.1 reported for the five-year period ending December 2017. Inventory growth averaged 6.0% annually across the collateral’s submarket for the five-year period ending December 2017 and is forecasted to average 4.0% annually over the five-year period ending December 2022. Comparatively, inventory growth across the greater Denver MSA averaged 3.3% annually over the five-year period ending December 2017 and is forecasted to average 2.3% annually over the five-year period ending December 2022. Reisfurther reported an average submarket vacancy rate of 6.0% as of Q2 2018, though properties constructed after 2009 exhibited an average vacancy of 10.9% over the same period. As of Q2 2018, properties constructed after 2009 accounted for 30.0% of submarket inventory with the largest portion of submarket inventory (45.0%), comprised of properties constructed between 2000 and 2009.

SPONSORSHIPThe sponsor for this loan is an open-ended REIT with a net worth and liquidity of $287.6 million and $11.7 million, respectively, as of March 2018. Per the real estate schedule dated May 2018, the REIT reported ownership interests in five properties, including two industrial properties, two office properties and one multifamily property. The sponsor is a repeat Freddie Mac borrower, having closed three transactions totaling over $51.0 million since 2005 with no material, derogatory or litigation issues reported. The Fund is managed by a publicly traded, Canadian-based financial services firm and advised by an investment adviser registered with the U.S. Securities and Exchange Commission. There is no guarantor for this transaction.

The property is managed by Pinnacle, a third-party management company, for a contractual rate equal to 2.5% of EGI. Pinnacle reported management interests in over 172,000 units, inclusive of more than 2,700 units across 11 properties in Colorado.




DBRS ANALYSISSITE INSPECTION SUMMARYDBRS toured the interior and exterior of the property on Friday, October 5, 2018, at approximately 11:30 a.m. Based on the site inspection, DBRS found the property quality to be Average (+).

The collateral is situated along Park Meadows Drive, which serves as a medical corridor to the area providing access to several medical offices located directly south of the collateral as well as Kaiser Permanente Lone Tree Medical Offices to the north. Park Meadows Drive additionally provides access to several nearby multifamily communities of similar vintage and curb appeal to the subject collateral, including a development located directly adjacent to the collateral’s north that was under construction as the time of DBRS inspection. Per management, the new development would likely be delivered to market between 2019 and 2020. Park Meadows Drive connects to South Yosemite Street and Lincoln Avenue to the north and south, respectively. Both South Yosemite Street and Lincoln Avenue provide access to various surrounding single-family and multifamily communities and retail center, including Target, Safeway and Sprouts-anchored retail centers located approximately 1.1 miles south, a Costco-anchored retail center located 1.9 miles north, and the Park Meadows Shopping Center located 2.6 miles north. The property additionally benefits from proximity to State Route 470 and U.S. I-25, which serve as primary east-west and north-south arterials to the region, respectively.

Per management, the collateral was approximately 87.9% occupied at the time of DBRS inspection because of a lack of adequate marketing during the transition in ownership. To combat the recent decline in occupancy, management was offering concessions in the form of waived application fees and $750 first-month rent discounts for vacant-unit move-ins. Management was additionally offering $500 first-month rent discounts for future-date move-ins, but indicated all concessions offered would cease upon achievement of a stable 90% to 95.0% occupancy. Per management, Waterford Lone Tree, one of the subject’s primary competitors, was offering $1,000 first-month rent discounts at the time of inspection. However, the collateral is of newer vintage than Waterford Lone Tree and, per management, benefits from generally larger average unit sizes.

The collateral consists of a single elongated five-story building featuring a two-tone beige stucco exterior accentuated by dark steel terraces and minimalistic blue wood panel. The collateral’s outdoor pool is located at the front of the property, which is separate from the rear-located outdoor grilling/lounge area but enhances the subject’s overall curb appeal along Park Meadows Drive. The collateral’s primary entrance opens to an open lobby with an on-site leasing office, an attached business center and immediate access to the collateral’s wine room, two-story fitness center and expansive tenant lounge area. The tenant lounge features lush seating arrangements, a modern kitchen/bar area, a pool table, an elongated fireplace, several wall-mounted televisions, expansive glass windows providing a flood of natural light and access to the rear-located outdoor grilling/lounge area. DBRS toured a mix of unit types at the time of inspection, all of which featured




modern vinyl wood flooring, modern stainless-steel kitchen appliances and granite countertops accentuated by appealing wood cabinetry. Select units additionally featured outdoor terraces with mountain views and/or expansive bay windows. Per management, units with mountain views rent for an $80 premium over standard units. Management additionally indicated that upcoming capital improvement work at the property would include the addition of electronic package lockers, upgrading the tenant club room, converting the wine room to a WeWork-type space and upgrading the existing roof-deck furniture. Overall, DBRS found the property to be very well maintained at the time of inspection.

DBRS NCF SUMMARY

NCF ANALYSIS

2016 2017 T-12 June 2018 Issuer NCF DBRS NCFNCF

Variance

GPR $4,313,383 $4,333,236 $4,334,038 $4,347,516 $4,347,516 0.0%

Other Income $250,656 $373,256 $347,721 $316,639 $347,721 9.8%

Vacancy & Concessions ($1,678,912) ($354,533) ($316,087) ($314,219) ($417,777) 33.0%

EGI $2,885,127 $4,351,958 $4,365,672 $4,349,936 $4,277,460 -1.7%

Expenses $1,332,662 $1,435,099 $1,452,902 $1,301,707 $1,376,686 5.8%

NOI $1,552,465 $2,916,859 $2,912,771 $3,048,229 $2,900,774 -4.8%

Capex $0 $0 $0 $46,000 $57,500 25.0%

NCF $1,552,465 $2,916,859 $2,912,771 $3,002,229 $2,843,274 -5.3%

The DBRS NCF is based on the DBRS Commercial Real Estate Property Analysis Criteria. The resulting DBRS NCF was $2,843,274, a -5.3% variance from the Issuer’s NCF of $3,002,229. The primary drivers of the variance included vacancy, general and administrative expenses, management fees and replacement reserves. DBRS estimated a 9.0% economic vacancy loss, which is greater than the T-12 reported and Issuer-concluded economic vacancy losses of 7.0% and 6.4%, respectively, but supported by the recent drop in occupancy to 87.9% reported at the time of DBRS inspection. Management indicated that the drop was a result of ownership transition, and that occupancy historically ranged from 95.0% to 96.0% since stabilization in 2017. However, per the financials provided, the property suffered an approximately 8.3% economic vacancy loss in 2017. DBRS inflated general and administrative expenses 3.0% over the T-12 period, resulting in a $46,931 variance from the Issuer’s budget-based general and administrative expense conclusions. DBRS additionally applied a management fee equal to 3.0% of EGI and replacement reserves of $250/unit compared to the Issuer’s concluded management fees and replacement reserves of 2.5% EGI and $200 per unit, respectively. DBRS VIEWPOINTThe collateral is relatively new construction and benefits from superior amenities and modern unit finishes. It benefits from proximity to I-25, which provides easy commute to the Denver Tech Center and Downtown Denver areas for the collateral’s predominantly working-professional tenant base. The property’s submarket features a large proportion of new construction, with multifamily properties constructed after 2000 and after 2009 comprising75.0% and 30.0% of inventory, respectively. The rise in new construction throughout the surrounding area is evidenced by the Reis-reported 6.0% average annual submarket inventory growth for the five-year period ending December 2017 compared to the greater Denver MSA average annual inventory growth of 3.3% reported over the same period. In addition to the several new construction competitive properties identified by the appraisal, a new apartment community, Arcos Lincoln Station Apartments, was under development directly north of the collateral at the time of DBRS inspection. Per management, the project is set to be delivered to market sometime between 2019 and 2020 and will feature upscale modern apartments and amenities similar to the collateral. Nonetheless, the submarket has a healthy supply/demand ratio of 1:1 and, according to Reis, is expected to maintain that ratio for the foreseeable future.




DOWNSIDE RISKS• The loan is full-term IO and does not have a non-recourse carveout guarantor. The loan exhibits refinance metrics consisting

of DBRS Exit Debt Yield and DBRS Refi DSCR of 8.3% and 0.90x. respectively.

• A new competitive multifamily property, Arcos Lincoln Station Apartments, is under construction directly north of the collateral and set to be delivered to market between 2019 and 2020.

• The property has limited operating history, with stabilization achieved in early 2017. Additionally, the property exhibited a decline in occupancy to approximately 87.9% the time of DBRS inspection in October 2018.

STABILIZING FACTORS• As of loan closing, the sponsor had nearly $28.6 million of cash equity remaining in the transaction. New supply dynamics

are expected to keep up with demand and the borrower expects the concessions to reduce once the property reaches occupancy in the 90’s.

• The loan features favorable loan metrics with a DBRS Entry Debt Yield and DBRS Term DSCR of 8.3% and 1.97x, respectively. For the DBRS Term DSCR to fall to a less than adequate 1.15x, vacancy at the property would need to rise to approximately 37.1%.

• Per management, the decline in occupancy resulted from a transition in ownership and steps were being taken through increases in concessions offered to amend the decline. Furthermore, Pinnacle is a well-equipped property management entity for the collateral with significant experience evidenced through a management portfolio of over 172,000 units, inclusive of over 2,700 units in the state of Colorado.



Transaction Structural Features

Freddie Mac Guarantee: Freddie Mac guarantees (1) timely payment of interest; (2) payment of related principal on the distribution date following the maturity date of each mortgage loan, to the extent such principal would have been distributed to the underlying Classes A-1, A-2 and A-M certificates; (3) reimbursement of any realized losses and addi-tional trust fund expenses allocated to the guaranteed certificates; and (4) ultimate payment of principal by the assumed final distribution date for the underlying Classes A-1, A-2 and A-M certificates. Freddie Mac will not guarantee any other class of Underlying Certificates other than the Underlying Guaranteed Certificates.

Controlling Class Rights: The transaction’s most subordinate bonds are controlled by the most subordinate bondhold-ers. The Special Servicer may be terminated without cause by the controlling class certificateholder.

No Downgrade Confirmation: This transaction contemplates waivers of Rating Agency Confirmations (RACs). It is the intent of DBRS to waive loan-level RACs, yet to receive notice upon their occurrence. DBRS will review all loan-level changes as a part of its monthly surveillance. DBRS will not waive RACs that affect any party involved in the operational risk of the transaction (e.g., replacement of Special Servicer, Master Servicer, etc.).

Surveillance

DBRS will perform monthly analytics, surveying the portfolio for delinquencies, prepayments, loan trigger events and corresponding DSCR volatility. DBRS publishes the results of its findings in its monthly surveillance report, summarizingcredit issues and the impact on the outstanding ratings of this transaction.

CMBS Rating Methodology – Highlights

The North American CMBS Multi-borrower Rating Methodology, Rating North American CMBS Interest-Only Certificates and DBRS Commercial Real Estate Property Analysis Criteria were employed to rate this transaction. DBRS begins the rating process by picking a statistically relevant sample for diversified pools by property type, loan originator and geographic location. DBRS reviews all third-party reports, including engineering and environmental reports, to ensure no significant contingencies exist, such as environmental contamination, structural faults or deferred maintenance. The appraisal is reviewed for historical usages, market dynamics and competitive property statistics. DBRS determines a stabilized NCF for each asset. Once the stabilized NCF is determined (in which DBRS makes certain market assumptions), one must consider how stable the cash flow is likely to be throughout the loan term.

DSCR DSCR is used to measure of the default risk of a loan as it incorporates the current operating performance of the property (NCF) and its capacity to service debt.

SUBORDINATION LEVELSDBRS sizes diversified pooled transactions (defined as those with greater than 20 loans with multiple borrowers) on a POD and loss-given-default (LGD) basis using the DBRS Large Pool Multi-borrower Parameters. The rating of a diversi-fied pooled CMBS transaction is the sum of the weighted-average loan-level credit enhancement (or expected losses) at the respective rating categories. DBRS determines the expected loss of an individual loan by multiplying its assigned POD by its assigned loss severity for each of the rating categories.



Loan Credit Enhancement = Probability of Default x Loss Severity Given Default

Transaction Credit Enhancement = ∑ of [Loan Credit Enhancement x Current Percent of Pool]

PROBABILITY OF DEFAULTUsing DBRS stabilized NCF, a loan’s POD is primarily driven by the more conservative/constraining of its DBRS Refi DSCR and its DBRS Term DSCR. The constraining DSCR is used to reference the DBRS POD curve, which assigns a POD for any given DSCR. The POD curve used by DBRS is based on a combination of jurisdictional studies of cash flow volatility where avail-able and publicly available data for commercial mortgage defaults.

PROBABILITY OF DEFAULT ADJUSTMENT FACTORSThe POD is adjusted for several different factors, some quantitative and others that reflect an analyst’s assessment of property qualities. Adjustment factors include concentration risk, recourse, property quality, sponsorship strength and single tenancy.

LOSS SEVERITY GIVEN DEFAULTDBRS estimates a loss given default based on the recoverable proceeds of each loan. The estimate of recoverable proceeds is governed by a loan’s cash flow and leverage as illustrated by its DBRS Debt Yield. DBRS assumes that upon default a loan will only be able to recover what the market has historically supported in terms of debt yield plus the typically required equity portion.

Recoverable Proceeds = Cash Flow/Debt Yield Benchmark + $ Equity Requirement

Loss % Given Default = 1 - [Loan’s Applicable Debt Yield/(Debt Yield Benchmark * (1 - Equity Requirement as % of Value))]

APPLICABLE DEBT YIELDIf the loan’s constraining DSCR is its term coverage, then the debt yield used when estimating recovery will be its current debt yield. If the loan’s constraining DSCR is its refinance coverage, then the debt yield used when estimating its recovery will be its maturity (or Exit) Debt Yield.

SEVERITY OF LOSS ADJUSTMENT FACTORSLoss given default is adjusted for several different factors, some quantitative and others that reflect an analyst’s assess-ment of certain property qualities. Adjustment factors include market, owner occupancy and loan size.

OPERATIONAL RISK REVIEWSDBRS reviews loan originators, servicers and operating advisors apart from transaction analytics and determines whether they are acceptable parties.

RATINGSDBRS CMBS ratings address the likelihood of timely payment of interest and ultimate payment of principal to the cer-tificates by the final rated maturity date. DBRS does not rate to the expected or scheduled maturity date set forth by the issuer; therefore, while DBRS will identify transactions and certificates that have considerable extension risk, the ratings are not affected as loans extend.



The methodology for DBRS ratings on IO certificates is detailed in Rating North American CMBS Interest-Only Certificates.

The North American CMBS Rating Methodology and DBRS’s Commercial Real Estate Property Analysis Criteria provides DBRS’s processes and criteria and is available by contacting us at [email protected] or by clicking on Methodologies at www.dbrs.com.



Notes:All figures are in U.S. dollars unless otherwise noted.

This report is based on information as of October 22, 2018. Subsequent information may result in material changes to the rating assigned herein and/or the contents of this report.

The DBRS group of companies consists of DBRS, Inc. (Delaware, U.S.)(NRSRO, DRO affiliate); DBRS Limited (Ontario, Canada)(DRO, NRSRO affiliate); DBRS Ratings Limited (England and Wales)(CRA, NRSRO affiliate, DRO affiliate); and DBRS Ratings México, Institución Calificadora de Valores S.A. de C.V. (Mexico)(CRA, NRSRO affiliate, DRO affiliate). Please note that DBRS Ratings Limited was registered as an NRSRO affiliate on July 14, 2017. For more information on regulatory registrations, recognitions and approvals, please see: http://www.dbrs.com/research/225752/highlights.pdf. © 2018, DBRS. All rights reserved. The information upon which DBRS ratings and other types of credit opinions and reports are based is obtained by DBRS from sources DBRS believes to be reliable. DBRS does not audit the information it receives in connection with the analytical process, and it does not and cannot independently verify that information in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS ratings, other types of credit opinions, reports and any other information provided by DBRS are provided “as is” and without representation or warranty of any kind. DBRS hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, fitness for any particular purpose or non-infringement of any of such information. In no event shall DBRS or its directors, officers, employees, independent contractors, agents and representatives (collectively, DBRS Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS or any DBRS Representative, in connection with or related to obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information. Ratings and other types of credit opinions issued by DBRS are, and must be construed solely as, statements of opinion and not statements of fact as to credit worthiness or recommendations to purchase, sell or hold any securities. A report with respect to a DBRS rating or other credit opinion is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. DBRS may receive compensation for its ratings and other credit opinions from, among others, issuers, insurers, guarantors and/or underwriters of debt securities. DBRS is not responsible for the content or operation of third party websites accessed through hypertext or other computer links and DBRS shall have no liability to any person or entity for the use of such third party websites. This publication may not be reproduced, retransmitted or distributed in any form without the prior written consent of DBRS. ALL DBRS RATINGS AND OTHER TYPES OF CREDIT OPINIONS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT http://www.dbrs.com/about/disclaimer. ADDITIONAL INFORMATION REGARDING DBRS RATINGS AND OTHER TYPES OF CREDIT OPINIONS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON http://www.dbrs.com.

ADR average daily rate

ARA appraisal reduction amount

ASER appraisal subordinate entitlement reduction

BOV broker’s opinion of value

CAM common area maintenance

capex capital expenditures

CBD central business district

CBRE CB Richard Ellis

CMBS commercial mortgage-backed securities

CoStar CoStar Group, Inc.

CREFC CRE Finance Council

DPO discounted payoff

DSCR debt service coverage ratio

EGI effective gross income

EOD event of default

F&B food & beverage

FF&E furniture, fixtures and equipment

FS Hotel full service hotel

G&A general and administrative

GLA gross leasable area

GPR gross potential rent

HVAC heating, ventilation and air conditioning

IO interest only

LC leasing commission

LGD loss severity given default

LOC letter of credit

LOI letter of intent

LS Hotel limited service hotel

LTC loan-to-cost

LTCT long-term credit tenant

LTV loan-to-value

MHC manufactured housing community

MTM month-to-month

MSA metropolitan statistical area

n.a. not available

n/a not applicable

NCF net cash flow

NNN triple net

NOI net operating income

NRA net rentable area

NRI net rental income

NR – PIF not rated – paid in full

OSAR operating statement analysis report

PCR property condition report

P&I principal and interest

POD probability of default

PIP property improvement plan

PILOT property in lieu of taxes

PSA pooling and servicing agreement

psf per square foot

R&M repairs and maintenance

REIT real estate investment trust

REO real estate owned

RevPAR revenue per available room

sf square foot/square feet

STR Smith Travel Research

SPE special-purpose entity

TI tenant improvement

TIC tenants in common

T-12 trailing 12 months

UW underwriting

WA weighted average

WAC weighted-average coupon

x times

YE year-end

YTD year-to-date

Capital Expenditure (capex)Costs incurred in the improvement of a property that will have a life of more than one year.

DBRS Refi DSCRA measure that divides DBRS stabilized NCF by the product of the loan’s maturity balance and a stressed refinance debt constant.

DBRS Term DSCRA measure that divides DBRS stabilized NCF by the actual debt service payment

Debt Service Coverage Ratio (DSCR)A measure of a mortgaged property’s ability to cover monthly debt service payments, defined as the ratio of net operating income (NOI) or net cash flow (NCF) to the debt service payments.

Effective Gross income (EGI)Rental revenue minus vacancies plus miscellaneous income.

Issuer UWIssuer underwritten from Annex A or servicer reports.

Loan-to-Value (LTV)The ratio between the principal amount of the mortgage balance, at origination or thereafter, and the most recent appraised value of the underlying real estate collateral, generally from origination.

Net Cash Flow (NCF)The revenues earned by a property’s ongoing operations less the expenses associated with such operations and the capital costs of tenant improvements, leasing commissions and capital expenditures (or reserves). Moreover, NCF is net operating income (NOI) less tenant improvements, leasing commissions and capital expenditures.

NNN (triple net)A lease that requires the tenant to pay operating expenses such as property taxes, insurance and maintenance, in addition to the rent.

Net Operating Income (NOI)The revenues earned by a property’s ongoing operations less the expenses associated with such operations but before mortgage payments, tenant improvements, replacement reserves and leasing commissions.

Net Rentable Area (NRA)The area (sf) for which rent can be charged. NRA includes the tenant’s premises plus an allocation of the common area directly benefiting the tenant, such as common corridors and restrooms.

Revenue Per Available Room (RevPAR)A measure that divides revenue by the number of available rooms, not the number of occupied rooms. It is a measure of how well the hotel has been able to fill rooms in the off-season, when demand is low even if rates are also low, and how well it fills the rooms and maximizes the rate in the high season, when there is high demand for hotel rooms.

Tenant Improvements (TIs)The expense to physically improve the property or space, such as new improvements or remodelling, paid by the borrower.

Weighted Average (WA)Calculation is weighted by the size of each mortgage in the pool.

Weighted-Average Coupon (WAC)The average coupon or interest payment on a set of mortgages, weighted by the size of each mortgage in the pool.

Definitions

Glossary

structured finance: cmbs fremf 2018-k82 mortgage trust

Documents