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Fitch Upgrades Fabrica SGR's Asset Manager Rating to 'High Standards'
February 14, 2014 / 3:01 PM / 4 years ago

Fitch Upgrades Fabrica SGR's Asset Manager Rating to 'High Standards'

(The following statement was released by the rating agency) LONDON/FRANKFURT, February 14 (Fitch) Fitch Ratings has upgraded Rome-based real estate investment fund manager Fabrica Immobiliare SGR's (Fabrica) Asset Manager Rating to 'High Standards' from 'Good Standards' . The Outlook is Stable. KEY RATING DRIVERS The upgrade reflects a successful start to Fabrica's partnership with CBRE Global Investors, with the award of a major new fund, sponsored by a pension institution, partly dedicated to investments outside of Italy. The upgrade also reflects the competitive edge Fabrica has gained in the quality of its investment and operational platform. The rating is further supported by the company's experienced, stable senior management, strong risk oversight and the high quality of its domestic operations with solid IT-back up. However Fabrica's rating recognises key challenges in adding staff resources to accommodate its envisaged growth. The company also faces tax and operational complexities in cross border asset management and challenges in finalising operating processes for its overseas business. Fabrica's 'High Standards ' rating is based on the following category scores: Company: High Controls: Good Investments: High Operations: High Technology: Good Asset Manager Ratings are assigned on a descriptive scale based on Fitch's assessment of the manager's investment and operational platform. Asset Managers are rated 'Good Standards', 'High Standards' and 'Highest Standards', relative to the standards applied by institutional investors in international markets. Asset manager operations in the 'High Standards' category demonstrate an operational framework that Fitch considers high relative to international institutional standards. COMPANY Fabrica is on target to achieve the key milestones of its 2014-2016 business plan. An expected rise in revenues and stronger financial resilience accomplished through an extension of the average fund duration has improved Fabrica's financial profile. It allows the company to comfortably fund its growth strategy. The partnership with CBRE Global Investors generates potential further diversification and cooperation has strengthened in most areas, notably in research. CONTROLS Fabrica will establish a dedicated risk committee and has updated its risk policy. The risk and control framework provides multi-level assessment of business and fund risks including third-party oversight. Property risk management is fully embedded in the investment and maintenance processes and quantified through uniform risk analytics. The stress testing framework with further stochastic risk analytics, however, awaits completion and final approval from its Board of Directors. INVESTMENTS Fabrica's extended investment teams ensure strong oversight on existing properties. Asset selection is research-driven, further enhanced through the partnership and accompanied by a structured decision-making process. In a still difficult market environment with lower valuations the teams have demonstrated swift responses in re-drafting business plans where needed. Investment quality management is sound, with regular reviews on sources of returns. OPERATIONS AND TECHNOLOGY The portfolio managers are supported by a dedicated middle office and automated workflows between agents. It provides an adequate match for the current volume and business but faces challenges in incorporating European properties as their related workflows are yet to be defined. In Fitch's view, reporting scope and quality represent high standards in the institutional sector and is above what is required by regulatory guidance Fabrica's business platform is adequately automated based on vendor systems and adapted to accomplish steady workflows. Data management and quality is sound but Fabrica relies exclusively on external services. The company has initiated a project to support inclusion of overseas properties and in light of extended business needs. Standard business continuity procedures are in place and tested. 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-2013, Fabrica managed one retail fund and 11 funds for qualified investors, with gross assets under management of about EUR2.5bn. The company had 46 staff of whom 15 were portfolio managers at end-2013. RATING SENSITIVITIES The rating may be sensitive to material adverse changes to any of the rating drivers. Fitch believes that the rating is capped at current levels as the company consolidates both its domestic and overseas businesses. A material deviation from Fitch's guidelines for any key rating driver could cause the rating to be downgraded. In particular, loss of key staff or failure to integrate the overseas business would likely trigger a downgrade. For additional information about Fitch's asset manager ratings guidelines, see the criteria referenced below. Contacts: Primary Analyst Roger Schneider, CIIA Senior Director +49 69 768076 242 Fitch Deutschland GmbH Taunusanlage 17 60325 Frankfurt am Main Secondary Analyst Alastair Sewell Director +44 203 530 1147 Committee Chairperson Ralph Aurora Senior Director + 1 2190 08 52 8 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: Additional information is available at The sources of information used to assess this rating were the public domain and Fabrica Immobilare SGR. Applicable criteria, ‘Asset Manager Rating Criteria’ dated 22 April 2013, are available on Applicable Criteria and Related Research: Asset Manager Rating Criteria 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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