OREANDA-NEWS. February 09, 2015. Fitch Ratings has affirmed FIP Funding S.r.l.'s (FIP) notes due January 2023, as follows:

EUR122.9m Class A1 (IT0003872717) affirmed at 'BBB+sf'; Outlook Stable
EUR1,121.9m Class A2 (IT0003872774) affirmed at 'BBB+sf'; Outlook Stable

FIP Funding Srl is a CMBS transaction secured by a single loan backed by commercial real estate assets across Italy. Agenzia del Demanio (ADD) - a public entity fully guaranteed by the Republic of Italy - is the sole tenant in the property portfolio.

KEY RATING DRIVERS

The affirmation reflects the stable performance of the underlying property portfolio and the ratings reflect those of the Republic of Italy (BBB+/Stable).

The ADD lease was renewed for a further nine years in 2013, at which point Fitch expected to see asset disposals accelerate to take advantage of the saleability of the income stream. After a slow start between mid-2013 and mid-2014 where EUR37m of property sales were recorded, 2H14 has seen more activity, registering nearly EUR163m in gross disposal proceeds.

In May of last year the fund manager announced that CBRE had been mandated to sell a basket of 21 properties from the portfolio with an estimated market value of around EUR800m. Fitch has no clarity on whether the increase in sales at end-2014 was linked to this mandate but we expect that the engagement of an agent to market the properties is likely to expedite sales.

As of the January 2015 interest payment date, the notes were backed by a portfolio of 231 assets located throughout Italy with concentration in the north and the centre of the country. The property portfolio consists mainly of offices, along with a small number of police training centres and specialist use buildings.

The remaining collateral value is EUR2,602m according to the latest investor report, giving a loan-to-value ratio (LTV) of 47.8%. This compares with an original portfolio value of EUR3,691m as of end-December 2004, which resulted in a 59.9% LTV at closing. Since the transaction closed in July 2005 165 assets have been disposed of.

RATING SENSITIVITIES

The ratings are sensitive to changes in ratings of the Republic of Italy.

Contacts:

Lead Surveillance Analyst
Jonathan Campbell
Associate Director
+44 20 3530 1225
Fitch Ratings Limited
30 North Colonnade
Canary Wharf
London E14 5GN

Committee Chairperson
Galen Moloney
Senior Director
+44 20 3530 1561

Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: athos.larkou@fitchratings.com.

Additional information is available at www.fitchratings.com.

The sources of information used to assess these ratings were the issuer, servicer, and periodic cash manager and servicer reports.

Applicable criteria, "Global Structured Finance Rating Criteria" dated 20 May 2014, "Counterparty Criteria for Structured Finance and Covered Bonds" dated 14 May 2014, "Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum" dated 14 May 2014, "Criteria for Sovereign Risk in Developed Markets for Structured Finance and Covered Bonds" dated 11 April 2014, "Rating Criteria for Commercial Mortgage-Backed Securities (CMBS) and Loans in EMEA" dated 10 June 2014 are available at www.fitchratings.com.