The FINANCIAL -- Fitch ratings -London-20 May 2011: Fitch ratings has affirmed Real Estate
Capital (Foundation) Limited's GBP173.5m class A CMBS notes
(XS0210882428) at 'AAAsf' with a Stable Outlook.
The affirmation and Stable Outlook reflect the continued stable performance of the underlying portfolio. At the most recent interest payment date (IPD) in May 2011 the interest-coverage-ratio (ICR) was 2.1x, the same as at the July 2010 IPD, whilst the loan-to-value ratio (LTV) has marginally increased to 45.4% from 43%. The net operating income (NOI) increased to GBP23.6m from GBP22.1m, mainly due to the further purchase of two assets, as detailed below.
The low LTV of 45.4% and exit debt yield of 15.7x (assuming cash held on account is used to pay down the loan), mean that Fitch considers this to be a low risk loan and expects either a refinance at loan maturity in July 2014, or a full repayment of principal by legal final maturity in July 2017.
In April 2010, 14-16 Church St, a retail unit in Kingston was sold for GBP4.7m. In July, The Portergate, an office property in Sheffield was purchased for GBP10.2m and in December 2010, Keith House, an office asset located in Scotland, was purchased for GBP8.1m. During this period, an additional GBP3.2m was spent on capex, the majority on the office Victory House, which has overall led the cash balance held on account to fall to GBP23.1m from GBP38.0m in July 2010.
Real Estate Capital (Foundation) Limited is a securitisation of a single commercial mortgage loan, which closed in March 2005. The loan is currently secured over a portfolio of 57 properties located throughout the UK. By market value, the use types are office (45%), retail (29%), industrial (24%) and other (2%). The transaction allows for 100% substitution throughout the life of the loan, albeit governed by a strict set of criteria.
At closing, the total debt was GBP152.5m. Subsequently, in June 2007, GBP111.0m of reserve notes was issued, taking the balance to GBP263.5m. In October 2008, GBP50.0m was prepaid along with a further GBP40.0m in January 2010, bringing the balance to its current GBP173.5m.
Source: Fitch ratings
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