Fitch Affirms Emerald Assets P1-AAA-002 at 'AAAsf'/Stable
(The following statement was released by the rating agency) HONG KONG, May 09 (Fitch) Fitch Ratings has affirmed Emerald Assets Limited's Series P1-AAA-002 floating-rate notes (FRNs). This is a CMBS transaction backed by a portfolio of 38 industrial properties in Singapore, which are owned by Ascendas Real Estate Investment Trust (A-REIT). The rating action is as follows: EUR197.5m FRNs due 2015 (ISIN: 0300668471) affirmed at 'AAAsf'; Outlook Stable KEY RATING DRIVERS The affirmation reflects the portfolio's strong cash flow, adequate occupancy levels and a debt service coverage ratio (DSCR) that has been above Fitch's DSCR under an 'AAAsf' stress scenario since transaction's closing in 2007. Emerald Assets Limited has notified parties in this transaction that all the outstanding P1-AAA-002 notes will be redeemed on 14 May 2014. To redeem the notes, A-REIT has issued JPY5,000m (equivalent to SGD62.31m after swap) of FRNs in March 2014. In addition, A-REIT in February 2014 secured a new SGD200m term loan facility that did not require it to use any of its properties as collateral. A-REIT will also use its undrawn revolving facilities to fully repay the P1-AAA-002 notes, which have outstanding balance equivalent to SGD395m. The portfolio continued to deliver strong net property income and cash flow in the financial year ended 31 March 2014 (FY14). Annualised cash flow for debt servicing in FY14 was 54% above Fitch's stabilised assumptions. Fitch's three-month average DSCR, using a refinance rate of 7.5%, has been adequate at 2.4x-2.9x since January 2010. As of 31 March 2014, Fitch's three-month average DSCR was 2.9x, versus Fitch's DSCR under a 'AAAsf' stress scenario of 1.8x. Fitch calculated the portfolio's weighted average occupancy at 90% in March 2014. The portfolio's occupancy rates ranged from 87% to 90% in FY14. Emerald Assets Limited, a special purpose company incorporated under the laws of Singapore, is a financing vehicle for A-REIT, which focuses on industrial properties. RATING SENSITIVITIES Given the very short time before redemption on 14 May 2014, it is very unlikely that the rating of the notes would be downgraded before that. Contacts: Lead Surveillance Analyst April Chen Director +852 2263 9936 Fitch Hong Kong Limited Suite 2801, Tower II, Lippo Centre, 89 Queensway, Hong Kong Committee Chairperson Helen Wong Senior Director +852 2263 9934 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: firstname.lastname@example.org. Additional information is available at www.fitchratings.com. The sources of information used to assess these ratings were Ascendas Real Estate Investment Trust, and Ascendas Funds Management (S) Ltd.