Fitch Affirms Westfield Stratford City Finance PLC at 'AAAsf'; Outlook Stable
The transaction is the securitisation of a GBP750m commercial mortgage loan secured by Westfield Stratford City, a super-regional shopping centre located in east London.
KEY RATING DRIVERS
The affirmation is reflects the improving performance of the underlying asset with net operating income increasing by 5.6% over the 12 months since the transaction's closing. Interest coverage remains high at 4.18x (up from 3.95x over the same period), and leverage stable at a 38.4% loan-to-value ratio (the centre has not been revalued, however). Occupancy, by area, has improved by 1% to 96%.
The 'AAAsf' rating of the single class of notes is not only reflective of low leverage and high interest coverage, but also of the strong and predictable income stream that stems from a prime retail asset. Due to its attractive location and public transport links, the shopping centre is favourably positioned to withstand market volatility.
Furthermore, and unlike some other UK single-borrower transactions, the structure does not allow for the raising of other pari passu senior ranking debt or similar optionality capable of compromising the claim of the secured creditors.
Material deterioration in net operating income, through vacancy or rental value declines, could lead to a downgrade.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.
Prior to the transactions closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis.
Overall, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information below was used in the analysis.
-Loan-by-loan data provided by Capita Asset Services as at 2 September 2015
-Transaction reporting provided by Capita Asset Services as at 11 August 2015
REPRESENTATIONS AND WARRANTIES
A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms to those typical for the asset class is available by accessing the appendix that accompanies the initial new issue report (see Westfield Stratford City Finance Plc - Appendix, dated 12 November 2014 at www.fitchratings.com). In addition refer to the special report "Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions" dated 12 June 2015 available on the Fitch website.
Fitch has affirmed the following ratings:
GBP750m Floating Rate Notes (XS1093970751) affirmed at 'AAAsf'; Outlook Stable