OREANDA-NEWS. Fitch Ratings has affirmed DECO 10 - Pan Europe 4 p.l.c.'s floating rate notes due 2019 as follows:

EUR85.5m class A2 (XS0276271375) affirmed at 'BB+sf'; Outlook Stable
EUR31.9m class B (XS0276272001) affirmed at 'B+sf''; Outlook Stable
EUR31.9m class C (XS0276273074) affirmed at 'CCsf'; Recovery Estimate (RE) revised to 65% from 85%
EUR18.9m class D (XS0276273660) affirmed at 'Csf'; RE 0%

DECO 10 closed in December 2006 and was originally the securitisation of 14 commercial real estate loans, backed by collateral located in Germany, Switzerland and the Netherlands. Twelve loans were solely originated by Deutsche Bank (DB, A/Negative) whereas the other two were syndications between DB and Citibank N.A. (A+/Stable) Landesbank Hessen-Thueringen Girozentrale (A+/Stable). Seven loans remain outstanding.

KEY RATING DRIVERS
The affirmation of the class A2 and B notes reflects the overall stable performance of the loan portfolio over the last 12 months. The Rubicon Nike loan, which is supported by strong contractual income, is sweeping surplus rent, and combined with collateral liquidations from other loans, has led to EUR29.3m of principal being repaid sequentially over this period. Over the loan's four-year remaining term, at current interest rates the Nike lease, which also expires in four years, should return over EUR20m of principal.

The pace of sales from the EUR83.6m Treveria II loan (50% is held in this securitisation) is a key rating driver of this deal and hinges on this loan's special servicer Situs Asset Management. Earlier this year Situs appointed a new asset manager to hasten sales, following disappointing progress and legal issues related to common land charges affecting most assets.

Only five properties were sold between July 2014 and April 2015, versus Situs's expectations of up to three or four assets per quarter. The slow sale weighs on the rating of the class A2 bonds, and the high vacancy of 18.5% recorded in April suggests that better-performing assets have been disposed of. Although Fitch expects a significant loss from Treveria II, those assets that are being sold have returned principal broadly in line with our expectations, thus helping to deleverage the senior bonds.

The collateral securing the DFK Portfolio and Toom DIY loans was sold in July 2015. DFK suffered a EUR5.1m write-down, which may rise to EUR5.7m after costs are deducted. This is worse than previously assumed by Fitch. The Toom DIY sale could result in losses of around EUR2.2m, which together with the DFK sale, could mean lower recoveries, as reflected in the revised RE for the class C notes.

The EUR13.7m Luebeck Retail and EUR12.1m Edeka Retail loans were formerly granted to borrowers owned by the same sponsor. In 2014, the special servicer (Hatfield Philips) enforced the sponsor's voting right and replaced management. The Edeka Retail asset is almost fully let to German retailer Edeka. This tenant is also the largest in the Luebeck Retail portfolio, which is 32.7% vacant. Both assets are up for sale but at loan-to-values (LTVs) of 115% and 145%, respectively, Fitch expects significant losses.

The EUR9m ECP MF Portfolio loan is performing in line with our expectations. It is secured by German multifamily housing collateral located in Berlin and Leipzig, and scheduled to mature in July 2016. With a low reported LTV of 56%, low vacancy and slowly increasing income, we expect the loan to repay on maturity.

RATING SENSITIVITIES
A sustained and significant increase in the pace of asset disposals for the Treveria II loan could result in an upgrade of the senior notes. Similarly, a full repayment of Rubicon Nike could result in positive rating action.

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.