Fitch Affirms Ratings Of Centro Shopping Centre Securities Limited - CMBS Series 2006-1
The following is a press release from Fitch Ratings:
Fitch Affirms Ratings of Centro Shopping Centre Securities Limited - CMBS Series 2006-1
Fitch Ratings-Sydney-13 October 2010: Fitch Ratings has today affirmed the ratings of Centro Shopping Centre Securities Limited - CMBS Series 2006-1 ( Centro). The transaction is a securitisation of Australian commercial mortgages securitised by Centro Properties Group. The rating actions are listed below:
AUD184m Class A1 affirmed at 'AA+sf'; Outlook Negative;
AUD300m Class A2 affirmed at 'AA+sf'; Outlook Negative;
EUR100m Class A3 affirmed at 'AA+sf'; Outlook Negative;
AUD33.6m Class B affirmed at 'AAsf'; Outlook Negative;
AUD56.3m Class C affirmed at 'A-sf'; Outlook Negative;
AUD48m Class D affirmed at 'BBB-sf'; Outlook Negative; and
AUD25.4m Class E affirmed at 'BB+sf'; Outlook Negative;
The affirmations reflect Fitch's view that the current credit enhancement levels adequately support the notes' ratings, and that the credit quality of the loans contained in the collateral pool remains in line with the agency's expectations.
"In analysing Centro, Fitch has taken into consideration the current strong performance of the portfolio's income, stabilising property valuations rates and the expected collateral maturity, while also incorporating appropriate stresses to reflect current developments in the Australian commercial property market. The agency's stressed property valuations are at present driving the rating of the senior notes," says James Zanesi, Associate Director in Fitch's Structured Finance team. "The Negative Outlook reflects the concerns about the ability of the December 2010 maturing loans to refinance on schedule amid the current commercial property environment," adds Mr. Zanesi.
Australian property values appear to be reaching a stabilisation level; the values of this transaction's portfolio have modestly increasing by 0.4% in the first six months of 2010. The weighted average property capitalisation rate was constant at 7.8%. The current net operating income (NOI) for the portfolio remains strong and stable - as of June 2010, the NOI had increased 15.2% since June 2006, and 1.6% since December 2009. The weighted average occupancy rate for the property portfolio was 99.5% in June 2010. Refinancing risk is a key aspect in analysing the transaction as approximately 31% of the obligor loans amounting to AUD257m are due to be refinanced in December 2010, with the remaining due in December 2011.
The Negative Outlook has been maintained on all classes due primarily to the lack of liquidity within the Australian commercial property finance market, the potential uncertainty this brings regarding the ability of obligors to repay their outstanding loans on their scheduled maturity dates, as well as the consequential effect on the values of the underlying security properties if they are required to be realised in the course of the transaction.
