TEXT-Fitch affirms Capita's UK servicer ratings

(The following statement was released by the rating agency)

Jan 20 - Fitch Ratings has affirmed Capita Asset Services (Ireland) Limited's (CAS Ireland) commercial mortgage primary servicer rating and Capita Asset Services (UK) Limited's (CAS UK; together CAS), commercial mortgage special servicer rating at 'CPS2+' and 'CSS2' respectively.

The special servicer rating reflects the depth of experience of CAS UK's dedicated special servicing team, with average industry experience approaching 25 years. This key strength is further underlined by the seven-strong team having an average tenure in their role of seven years and the support of a Director with almost 30 years experience within the UK real estate market, 20 of which have been spent at Capita. The 'CSS2' rating assigned to CAS UK is currently Fitch's highest rating for UK commercial mortgage special servicers.

Both ratings are supported by a growing portfolio of assets under management, the experienced senior management team and a robust risk management regime. Neither The Capita Group plc (CAS's ultimate parent) nor CAS are rated by Fitch. The agency's Corporate team has conducted a review of Capita's financials, and the group's creditworthiness has been taken into account in assessing CAS's own financial condition.

CAS successfully completed the acquisition of 12 CMBS deals from Barclays Capital Mortgage Servicing (BCMS, unrated) in March 2011. This brought 84 loans totalling GBP4.8bn to CAS, along with 10 staff. A robust project management governance structure and successful loan migration saw the loans fully transitioned to CAS's IT systems in October 2011. Fitch believes this successful transfer demonstrates the company's ability to effectively manage growth, and the qualities of CAS's project management and loan boarding procedures.

As of 30 June 2011, CAS Ireland's total UK primary servicing portfolio included 297 loans secured by 1,730 properties with an outstanding principal balance of GBP10.94bn (54% securitised by value). The portfolio includes a variety of commercial asset types, notably healthcare, hotel and office. The primary servicer portfolio also includes an additional 285 loans secured against non-UK assets, totalling GBP21.8bn.

CAS-UK's named special servicing portfolio, as of 30 June 2011, totalled GBP7.44bn (92% securitised), comprising 13 loans backed by 2,925 UK assets. The named special servicer portfolio includes an additional GBP12.2bn secured by non-UK assets.

The portfolio figures do not include the Irish government's National Asset Management Agency (NAMA) portfolio where CAS is the named 'master servicer' responsible for reporting, cash management and servicer oversight of the participating Irish banks.

Fitch employed its global and UK servicer rating criteria in analysing the servicer's operations and financial condition, with the former including a comparison against similar UK servicers as part of the review process. The analysis is based on information provided to Fitch by CAS.