TEXT - Fitch affirms Epic (Ayton) Plc

Thu Jan 10, 2013 11:37am EST

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Jan 10 - Fitch Ratings has affirmed the floating-rate notes issued by Epic
(Ayton) plc due 2016 as follows:

GBP85.9m Class A (XS0237881445) affirmed at 'AAAsf'; Stable Outlook
GBP9.6m Class B (XS0237883490) affirmed at 'AAAsf'; Stable Outlook
GBP11.4m Class C (XS0237885784) affirmed at 'AAAsf'; Stable Outlook 
GBP12.7m Class D (XS0237889000) affirmed at 'AAAsf'; Stable Outlook
GBP15.8m Class E (XS0237889695) affirmed at 'AAsf'; Stable Outlook
GBP15.8m Class F (XS0237889935) affirmed at 'Asf'; Stable Outlook

The affirmation reflects the continued strong performance of the sole remaining 
loan and the underlying asset, 214 Oxford Street, London. The two tenants, Nike 
(accounting for 41.6% of total rent) and Arcadia Group/Top Shop (58.4%), jointly
occupy the entire building and operate in their respective flagship stores. The 
leases expire in 2033 (Nike) and 2025 (Arcadia), although Nike has a lease break
option in 2023. As expected by Fitch, neither tenant exercised its break option 
in 2012 (Arcadia) and 2013 (Nike). 

A rent review dated in 2010 has been only recently been resolved, resulting in a
lump sum of back-dated rent (GBP5.4m) paid by the tenants, which in October 2012
led to a GBP4.6m repayment of the senior loan as well as the redemption of the 
(non-securitised) GBP1.6m junior loan. For the remaining payment dates until 
loan maturity in July 2013, the servicer (Royal Bank of Scotland) expects 
approximately GBP1.6m of amortisation (via cash sweep) per quarter. 

The current loan-to-value ratio stands at 49%, based on a 2010 valuation, while 
interest coverage stands at a healthy 1.8x. Based on the property's prime 
location and strong income profile, Fitch expects the loan to be refinanced at 
or soon after its maturity in spite of its large ticket size (GBP151.2m).
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