Fitch Affirms Emerald Assets P1-AAA-002 at 'AAAsf'/Stable

Fri May 9, 2014 1:47am EDT

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(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: wailun.wan@fitchratings.com. 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.

The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public. Applicable criteria, "Criteria for Rating CMBS in Asia-Pacific", dated 2 May 2014; "Global Structured Finance Rating Criteria", dated 24 May 2013; "Counterparty Criteria for Structured Finance and Covered Bonds", dated 13 May 2013; "Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum", dated 13 May 2013; "Criteria for Sovereign Risk in Developed Markets for Structured Finance and Covered Bonds", dated 11 April 2014; are available on www.fitchratings.com. Applicable Criteria and Related Research: Criteria for Rating CMBS in Asia-Pacific here Global Structured Finance Rating Criteria here Counterparty Criteria for Structured Finance and Covered Bonds here Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum here Criteria for Sovereign Risk in Developed Markets for Structured Finance and Covered Bonds 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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