OREANDA-NEWS. Fitch Ratings has affirmed Broadgate Financing Plc. A full list of rating actions is at the end of this rating action commentary.

The transaction provides long-term financing of a portfolio of prime office properties in the City of London, owned by Broadgate REIT Limited.

KEY RATING DRIVERS

The notes benefit from low leverage against strong collateral. The all-in loan-to-value (LTV) is 45%, based on an external valuation and a loan balance as at April 2016. Fitch's LTV estimate based on the agency's sustainable value is higher at around 62%, but this is still a moderate level and should shield investors from swings in the property cycle.

Broadgate has seen substantial rental growth over recent years, benefiting from strong demand for office space in the City of London. This creates some headroom against London City office downside scenarios associated with the outcome of the Brexit referendum. Rental growth in this market had already slowed ahead of the referendum. Fitch expects rental conditions to cool down further.

This may adversely affect re-letting of some 800,000 sq ft of office space at 1, 2 and 3 Finsbury Avenue and 100 Liverpool Street currently tenanted by UBS AG. Fitch understands that UBS is planning to vacate from end 2016. A measure of evolving sentiment in the London prime office market will be the speed and scale of any redevelopment of the space, given British Land has previously announced its intention to make a significant capital investment in order to attract new tenants.

RATING SENSITIVITIES

Evidence of sharply falling rents and extended vacancy periods may negatively affect the class C and D notes' ratings.

Fitch's 'Bsf' market value is GBP2.7bn.

DUE DILIGENCE USAGE

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

DATA ADEQUACY

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.

Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.

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.

- Rent-rolls provided by the asset manager as at March 2016

- Transaction reporting provided by the trustee as at April 2016

The rating actions are as follows:

GBP187.5m class A1 due January 2032 (XS0213092066) affirmed at 'AAAsf'; Outlook Stable

GBP221.6m class A2 due April 2031 (XS0211897664) affirmed at 'AAAsf'; Outlook Stable

GBP175.0m class A3 due April 2033 (XS0211897821) affirmed at 'AAAsf'; Outlook Stable

GBP400.0m class A4 due July 2036 (XS0213092652) affirmed at 'AAAsf'; Outlook Stable

GBP365.0m class B due October 2033 (XS0211898043) affirmed at 'AAsf'; Outlook Stable

GBP75.4m class C1 due January 2022 (XS0213093031) affirmed at 'BBB-sf'; Outlook Stable

GBP209.3m class C2 due April 2035 (XS0211898126) affirmed at 'BBB-sf'; Outlook Stable

GBP22.5m class D due October 2025 (XS0213093627) affirmed at 'BBB-sf'; Outlook Stable