OREANDA-NEWS. Fitch Ratings has affirmed DECO 14 - Pan Europe 5 B.V.'s floating-rate notes due 2020 and revised the Outlook on one tranche as follows:

EUR1.8m class A-2 (XS0292121802) affirmed at 'AA+sf''; Outlook Stable
EUR64.6m class A-3 (XS0292122289) affirmed at 'Asf'; Outlook Stable
EUR99.4m class B (XS0291365137) affirmed at 'BBsf'; Outlook Stable
EUR64.6m class C (XS0291365566) affirmed at 'Bsf'; Outlook revised to Stable from Negative
EUR100.8m class D (XS0291367182) affirmed at 'CCsf'; Recovery Estimate (RE) 30%
EUR25.8m class E (XS0291367422) affirmed at 'Csf'; RE 0%
EUR11.9m class F (XS0291368156) affirmed at 'Csf'; RE 0%

The transaction is a securitisation of originally 13 commercial real estate loans originated by Deutsche Bank AG (A-/Stable), including one jointly with Lehman Commercial Paper Inc. In January 2016, five loans remained, with collateral in Italy and Germany.

KEY RATING DRIVERS
The rating actions reflect the sequential repayment of the notes' principal of EUR81.2m, following the full repayment of the Bulgarian loan (Sofia Business Park), as well as measurable progress in liquidating the collateral of the defaulted Arcadia, CGG- Tambelle REDO 3 and Mansford Nord Bayern loans. Sale prices have been slightly in excess of reported valuations and also Fitch's expectations, helping to de-leverage the notes.

However, the ratings also factor in lower recovery expectations for Cottbus Shopping Centre, as highlighted in a significantly reduced 2015 valuation, and an ultimate loss allocation (as non-accruing interest on the unrated class G notes) from the resolution of the Karstadt Hilden loan.

Moreover, given the large exposure to Italian collateral, the A-3 notes are unlikely to see rating upgrades into a higher category, even though the EUR126.7m Armilla Clarice 2 loan is expected to perform through to maturity in October and repay in full. The collateral is fully let to Telecom Italia, rated 'BBB-/Stable' on long leases. With no revaluation since closing in 2007, the reported loan-to-value (LTV) of 52.3% is likely understating risk, although Fitch believes equity on the asset is sufficient to allow redemption.

The defaulted EUR87.6m Arcadia loan has been in special servicing since 2010 as a result of an uncured interest coverage ratio breach. It did not repay at maturity in January 2014 and remains in standstill, at least until June, to allow time for a consensual asset sale. Since the last rating action in March 2015, five sales have been completed and 11 more sales are pending formal completion, leaving five remaining. With a reported LTV of 246% in January (based on 16 assets at that time), Fitch expects a significant loss.

The EUR90m CCG- Tambelle REDO 3 loan defaulted in 2014 and entered preliminary administration proceedings in Germany. All loan accounts have been locked until commencement of final proceedings, with an information lag of up to three months as advised by the administrator. However, sales have commenced with one asset sold and two more assets approved for sale over the last 12 months. The loan is secured on 13 mixed-use/retail warehouses in Germany. Fitch expects a moderate loss.

The EUR39.6m Cottbus Shopping Centre loan defaulted at maturity. A July 2015 revaluation of the retail warehouse in Cottbus (Germany) placed the LTV at 215%, up from 74% previously. The decline in value was attributed to lower market rents and higher costs. The collateral is predominantly let to Kaufland, which in turn sub-lets some space. Some EUR2.4m of reserve funds are available for capital expenditure prior to loan exit. Fitch expects a large loss.

Fifteen assets securing the defaulted EUR33.8m Mansford Nord Bayern loan have been sold since the last rating action, leaving seven German retail warehouses, all fully let to EDEKA though on short remaining leases. The bulk sale achieved a price in line with the valuation and Fitch's expectations. However, given a reported LTV of 212% in January, Fitch expects a significant loss.

RATING SENSITIVITIES
Failure to repay the Armilla loan at maturity could lead to a protracted Italian workout. As maturity draws closer, this could lead to a downgrade of the remaining investment-grade tranches. For the class C notes, a downgrade could be caused by recoveries from asset sales consistently falling short of Fitch's expectations.

Fitch expects 'Bsf' debt proceeds of approximately EUR250m.

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.

SOURCES OF INFORMATION
The information below was used in the analysis.
-Transaction reporting provided by Situs Asset Management as at end-October 2015/January 2016
-Transaction reporting provided by Deutsche Bank AG as at end-October 2015/January 2016