OREANDA-NEWS. Fitch Ratings has affirmed Vesteda Residential Funding II B.V.'s floating-rate EUR300m Class A4 notes (XS0224131473) due 2017 at 'AAAsf' with a Stable Outlook.

The transaction is a securitisation of the residential real estate portfolio of Vesteda Residential Fund (FGR), a fund for the joint account of participants specialising in investing in apartment units and single-family houses in the Netherlands.

KEY RATING DRIVERS
The affirmation reflects the transaction's stable performance since Fitch's last rating action in March 2014, following the redemption of the then outstanding class A7 notes (EUR350m).

The portfolio loan-to-value (LTV) ratio has remained low at 29%, decreasing from 35% at Fitch's last rating action. The allocated debt amount for the collateral securing the redeemed class A7 was sufficient to reduce the transaction's LTV. Refinancing risk is mitigated by the low LTV and Vesteda's proven track record in refinancing substantial portions of its CMBS debt to date.

The portfolio's debt service ratio has risen to 3.48x from 3.45x over the past 12 months, and is at a healthy level above the 1.80x covenant. Vacancy has remained at a steady 4.5% for the past 12 months. Fitch considers this low for a portfolio of this type of asset.

RATING SENSITIVITIES
The sound loan performance should mitigate refinancing risk. However, unanticipated significant disruption to the Dutch residential market reflected through sharp declines in underlying collateral value could lead to negative rating action.