September 4, 2014 / 8:16 AM / 3 years ago

Fitch Affirms GK MLOX3's Notes

(The following statement was released by the rating agency) TOKYO, September 04 (Fitch) Fitch Ratings has affirmed GK MLOX3's class C and D notes due June 2015. The transaction is a Japanese multi-borrower type CMBS securitisation. The rating actions are as follows: JPY1.13bn* class C notes affirmed at 'BBsf''; Outlook Stable JPY1.78bn* class D notes affirmed at 'CCsf''; Recovery Estimate 45% *as of 3 September 2014 KEY RATING DRIVERS The affirmation of the class C notes reflects further principal repayment of the underlying loan and Fitch's view that full redemption of the notes is likely. Since the previous rating action in September 2013, two of six properties backing the remaining defaulted loan have been sold at higher values than Fitch had expected. This contributed to further repayment of the class C notes. Fitch believes the remaining properties will be sold by the legal final maturity and expects the associated sale proceeds to be sufficient to repay the class C notes in full. Fitch has revised downwards its property valuation for one out of the four remaining collateral properties, reflecting the collateral property's recent weaker-than-expected cash flow performance. However, this has been offset by the repayment so far. The affirmation of the class D notes reflects Fitch's view that principal loss remains probable for this class. RATING SENSITIVITIES A significant further delay in workout activities, which could push back the full redemption of the class C notes closer to their legal final maturity, may result in negative rating action on the notes. The rating of the class D notes is sensitive to the sales values of the remaining properties as well as any delay in the disposition of remaining properties, with negative rating action likely as legal final maturity approaches. Fitch assigned ratings to this transaction in September 2007. The transaction was initially a securitisation of five loans backed by 25 property trust beneficiary interests. It is currently backed by one defaulted loan, which is in turn backed by four properties. Contacts: Lead Surveillance Analyst Atsushi Kuroda Senior Director +81 3 3288 2692 Fitch Ratings Japan Limited Kojimachi Crystal City East Wing 3rd Floor 4-8 Kojimachi, Chiyoda-ku, Tokyo 102-0083 Committee Chairperson Naoki Saito Director +81 3 3288 2631 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: Additional information is available at The sources of information used to assess these ratings were the servicer, Orix Asset Management & Loan Services Corporation and the note issuer, GK MLOX3. Applicable criteria, 'Global Structured Finance Rating Criteria', dated 4 August 2014; 'Criteria for Rating CMBS in Asia-Pacific', dated 2 May 2014; and 'Counterparty Criteria for Structured Finance and Covered Bonds', dated 14 May 2014; are available at Related research, 'Structured Finance Recovery Estimates for Distressed Securities', dated 18 November 2011; is available at Applicable Criteria and Related Research: Global Structured Finance Rating Criteria here Criteria for Rating CMBS in Asia-Pacific here Counterparty Criteria for Structured Finance and Covered Bonds here Structured Finance Recovery Estimates for Distressed Securities here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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