TEXT-Fitch publishes Fabrica Immobiliare 'M3+' asset manager rating

Thu Feb 28, 2013 9:53am EST

Link to Fitch Ratings' Report: Fabrica Immobiliare SGRFeb 28 - Fitch Ratings has published Fabrica Immobiliare SGR's (Fabrica)
'M3+' Real Estate Asset Manager Rating.

KEY RATING DRIVERS
The rating's main driver is the company's track record and experience as Italy's
sixth largest real estate management company. A strategic partnership with CBRE
Global Investors was signed in December 2012 to promote co-branded funds and
investments outside Italy, which opens geographic diversification opportunities.
The rating recognises the research oriented investment expertise over a broader
set of different real estate property types and strategies. It benefits from a
process driven asset selection and portfolio management with a well-structured
operational platform and workflow management.

However Fabrica also meets a number of challenges: The strategic partnership is
in its early stages and needs to be developed to increase the company's
competitive edge. The envisaged launch of new funds and execution of existing
funds' business plans is potentially constrained by illiquid markets. Given
staff turnover in 2012 Fabrica also needs to maintain stability and maximise the
benefits from increased analytical resources and client outreach.

Fabrica's 'M3+' rating is based on the following category scores, which
represents a scale from 1 to 5, with 1 as the highest possible score:

Company & Staffing: 3.00
Risk Management & Controls: 2.75
Investment Selection: 2.75
Portfolio Management: 3.00
Investment Administration: 2.75

COMPANY AND STAFFING
The partnership with CBRE Global Investors in Fitch's view is a key milestone in
the company's development. Nevertheless the score recognises the weaker
financial profile of Fabrica's key shareholders, Banca Monte dei di Siena SpA
(BMPS; 'BBB'/Stable/'F3`) and FGC SpA (Caltagirone Group, unrated). The
liquidation of two funds due to a change in the tax regime of Italian real
estate investment funds lower Fabrica's assets under management (AuM), weaken
its financial resilience and dent its track record of profitability. . However
the average fund duration is above peers and is expected to be lengthened with
new institutional mandates pending better market conditions. The company has
qualified staff and demonstrated solid replacement capacity following turnover
in 2012. However given the size of the operation, key staff risk prevails.

RISK MANAGEMENT AND CONTROL
Fabrica has an established three line defense model based on internal risk
management, compliance and internal audit. The score benefits from a systematic
operational risk management including staff self-assessments. Fitch expects more
input from the application of stochastic risk models and stress testing by the
newly hired head of risk management but considers it essential to build upon the
quality of the established bottom-up risk analysis.

INVESTMENT SELECTION
Fabrica applies a diligent ex-ante evaluation of all fund strategies and
objectives with a prudent assessment of return expectations. It added to its
research resources based on an extensive proprietary database and has
opportunities to leverage on CBRE Global Investors' international market
insight. It follows a disciplined multi-step selection/disposal process
supported by systematic due diligence procedures. Nevertheless the ability to
perform the funds' business plan disposals is challenged in the current market
environment.

PORTFOLIO MANAGEMENT
Fabrica's ex-ante fund budget planning with its integrated control and review
cycle is the key management tool for portfolio staff. Non-core functions
(facility and property management) are outsourced based on defined service level
agreements and key performance indicators. Fitch recognises the consistency in
the management approach and strength in tenant management. It considers the
financial management conservative as demonstrated by low leverage compared with
the market and lack of financing risk to 2015.

INVESTMENT ADMINISTRATION
Fabrica has an institutional mind-set and servicing capacity. Reporting largely
reflects regulatory requirements. The score benefits from an established middle
office function with tested routines in transaction processing. Fitch recognises
an improved level of automation and an increased capacity to convert
accounting/administration data straight into control data. Valuation and their
underlying approaches are actively monitored.

COMPANY PROFILE
Fabrica Imobiliare SGR was created in 2003 and started operations in July 2004.
The company is dedicated to the development, promotion and management of
(closed-end) real estate investment funds for institutional clients and private
savers. At end-June 2012, Fabrica managed one retail fund and eight funds for
qualified investors, with gross assets under management of EUR2.5bn. The company
employed 40 staff of which 11 are portfolio managers at end December 2012.

RATING SENSITIVITY
The rating may be sensitive to material adverse changes to any of the
aforementioned rating drivers. A material deviation from Fitch guidelines for
any key rating driver could cause the rating to be downgraded.

For additional information about Fitch's asset manager ratings guidelines,
please review the criteria referenced below, which can be found on Fitch's
website at www.fitchratings.com.

Fabrica Immobiliare SGR's rating report will shortly be available at
www.fitchratings.com.


Additional information is available at www.fitchratings.com.

The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.

The sources of information used to assess this rating were the public domain and
Fabrica Immobiliare SGR.

Applicable criteria 'Reviewing and Rating Real Estate Asset Managers', dated 22
June 2009 are available at www.fitchratings.com

Applicable Criteria and Related Research
Reviewing and Rating Real Estate Asset Managers
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