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Feb 3 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings says that having analysed the relative difference of the mortgage lending values (MLV) and the respective market values (MV) for German properties securing commercial mortgage loans in Fitch rated mortgage Pfandbriefe, the MLVs for properties securing commercial mortgages are on average 12% lower than the respective MVs, as of March 2013. This figure differs by property type, size, issuer and the state of economy.
The difference between MVs and the MLVs is highest for large office and retail properties compared to small and moderate-sized properties. Properties with a granular tenant structure (multifamily and large shopping centres) have lower cushions that are relatively independent from size.
Fitch says Pfandbriefe are additionally well protected by MV cushions. For instance, a 12% MV cushion transforms the maximum 60% loan-to-mortgage lending value (LTMLV) eligibility threshold (Beleihungsgrenze) into an equivalent loan-to-value limit of 53% for mortgage loans refinanced via Pfandbriefe. This contributes to high recoveries given default of 70%-90% on mortgage cover pools in ‘AAA’ stress scenarios.
Further information is contained in the report entitled “Market vs. Mortgage Lending Values in Pfandbriefe - Factors Driving the Relative Difference”, which is available at www.fitchratings.com or by clicking the link below.
Link to Fitch Ratings’ Report: Market vs. Mortgage Lending Values in Pfandbriefe