OREANDA-NEWS. Fitch Ratings has affirmed Silver Oak Ltd.'s (Silver Oak) Class A notes as listed below. Silver Oak is a CMBS transaction backed by Raffles City Singapore, which comprises Raffles City Shopping Centre, Raffles City Tower, two hotel towers (Fairmont Singapore and Swissotel The Stamford) and a convention centre.

The rating action is as follows:
USD645m Class A secured floating-rate notes due June 2018 affirmed at 'AAAsf'; Outlook Stable

KEY RATING DRIVERS
The affirmation reflects sufficient cash flows from the underlying properties, which have been above Fitch's stabilised cash flow assumptions since closing in June 2011. Fitch's stressed debt service coverage ratio (DSCR) and loan-to-value (LTV) ratio for Silver Oak continue to meet the agency's criteria thresholds.

Robust tourism and domestic consumption in Singapore continue to support the transaction's retail and hotel components, which accounted for over 80% of Silver Oak's total gross revenues in June 2015. In the same period, the office component contributed 16.9% of the transaction's total gross revenues, amid favourable conditions in Singapore's property market.

Office and retail leases expiring in 2015 are in the process of being renewed, ensuring continuity of leases. Hotel leases expiring in 2016 have already been renewed for a further 20 years. Rental income from retail and office leases expiring in the second half of 2015 was only 6.2% and 18.4% of retail and office gross rental respectively at end-June 2015. Fitch deems the renewal risks for retail leases as limited given the property manager's track record in renewing leases. The property portfolio's prime location, strong transport links, and experienced property-management team are likely to continue to support stable operating performance.

Fitch's stressed three-month DSCR for the Class A notes has been maintained at an average 2.7x in the year to June 2015 (assuming a stressed refinancing rate of 6.65%), which is higher than the DSCR hurdle of 1.77x at the 'AAAsf' stress. The reported three-month DSCR averaged 6.2x for the same period. The committed occupancy rate has been stable at over 98.5% since the transaction's closing. The LTV ratio of 25.6% at end-June 2015 reflects the high property valuation of the complex, and remains lower than Fitch's stressed LTV of 34.9% at closing.

Silver Oak is a special-purpose company incorporated under the laws of Singapore. RCS Trust is the owner of the underlying property as well as the borrower. RCS Trust is jointly owned by CapitaLand Commercial Trust and CapitaLand Mall Trust, with 60% and 40% interest respectively. CapitaLand (RCS) Property Management Pte Ltd, an indirect subsidiary of CapitaLand Limited, is the property manager for the underlying property.

RATING SENSITIVITIES
Based on Fitch's sensitivity analysis, a negative rating action may be considered if free cash flows declined by 30% from annualised levels in 2015 or if the value of the properties declines by 47% from the latest valuation in June 2015, assuming the liquidity facility is fully drawn. However, the liquidity facility has not been drawn since closing and is not expected to be drawn given sufficient cash flows.

Initial key rating drivers and rating sensitivities are further described in the new issue report for Silver Oak Ltd. dated 22 June 2011.

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 underlying pools and the transactions. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third-party assessment of the underlying pools information or conducted a review of loan origination files as part of its ongoing monitoring.