TEXT - Fitch affirms Epic (Ayton) Plc
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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