OREANDA-NEWS. Fitch Ratings has affirmed the ratings of DECO 2014 - Gondola S.r.l.'s floating rate notes due 2026 as follows:

EUR173.6m Class A (IT0005030777) affirmed at 'A+sf'; Outlook Stable
EUR65m Class B (IT0005030793) affirmed at 'Asf'; Outlook Stable
EUR30.5m Class C (IT0005030801) affirmed at 'A-sf'; Outlook Stable
EUR52m Class D (IT0005030827) affirmed at 'BBB-sf'; Outlook Stable
EUR21.9m Class E (IT0005030835) affirmed at 'BBsf'; Outlook Stable

DECO 2014 - GONDOLA S.R.L. closed in 2014 and is a securitisation of three commercial mortgage loans with an original balance of EUR355m. The loans were granted by Deutsche Bank AG (A/Negative) to two Italian closed-end real estate funds and two cross-collateralised Italian limited-liability companies to acquire/ refinance 13 logistics centres, two shopping-centres, two office buildings and one hotel. All assets are located in Italy and ultimately owned by the borrowers' common sponsor, Blackstone.

KEY RATING DRIVERS
The affirmation reflects the stable performance of the transaction since closing in July 2014. While prime office rents in Rome and Milan have been falling, yields have remained stable. Shopping centres in the North (e.g. Bologna) have seen stable prime rents and yields have started to compress. The industrial sector's performance has been stable. Fitch considers that half of the collateral assets are of prime quality, and that overall conditions are in line with at closing.

All three securitised loans amortise in line with schedules/cash sweep projections and have seen their loan-to-value ratios (based on original valuations) decline as a result. In May 2015, 96.7% of the original portfolio remained outstanding, with all the principal proceeds allocated to the senior notes. Fitch continues to expect all three loans to repay in full.

The EUR80.8m Gateway loan is secured on two shopping centres located in Marcon and Monselice, both in the Veneto region. The larger asset, Valecentre, experienced lower footfall and sales in 1Q15 compared with 1Q14, reflected in vacancy slightly increasing to 24.4% from 22.8% at closing. The smaller Airone Centre has not suffered any material change in footfall or sales, and occupancy has slightly improved.

The loan has been amortising EUR0.2m per quarter, in line with schedule. Nevertheless, interest coverage decreased to 1.8x in May 2015 from 2.1x at closing, reflecting weakening performance at Valecenter but remains comfortably above the cash trap trigger of 1.45x. While the weighted average lease term (until break) across the centres is only 2.8 years, income is granular, with no tenant accounting for more than 4%.

The EUR131.9m Delphine loan is secured on an office complex (comprising three buildings) and a hotel in Milan, as well as an office in Rome. The sole tenant in the Milan offices, RCS Media Group, has served notice to vacate one of the offices, as expected at closing. The other two offices are let with approximately seven years to break. The Rome office is fully let to Telecom Italia (BBB-/Negative) for another 3.3 years to break. The hotel saw stable turnover in 1Q15, compared with 1Q14.

The EUR130.3m Mazer loan is secured on 13 logistics assets in northern Italy. Debt service coverage improved to 1.7x as of end-May 2015, from 1.3x at closing, although this is predominantly due to amortisation and reduced finance costs. The servicer reported EUR2m of rental arrears in May 2015, down from EUR2.5m in February, with only EUR0.1m more than 90 days overdue.

RATING SENSITIVITIES
Fitch expects a full repayment of all loans in a 'Bsf' scenario.

A moderate downturn in the Italian retail sector could result in downgrades. Similarly, a downgrade of the sovereign rating of Italy (BBB+/Stable) may result in a lower rating cap on the notes.

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 last 12 months 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 sources of information used to assess these ratings were the issuer, servicer, and periodic cash management and servicer reports.