GCR accords AA-(ZA) final, public rating to Accelerate Property Fund’s Senior Secured Notes.
Johannesburg, 26 September 2014 – Global Credit Ratings has accorded a final, public long term rating of ‘AA-(ZA)’ with a ‘Stable’ outlook to the Senior Secured Notes (the ‘Notes’) to be issued by Accelerate Property Fund Limited (‘APF’) under its R5bn DMTN Programme, in September 2014.
- ZAR R416m Senior Secured Notes, stock code APF01, coupon 3M JIBAR + 170bps, maturing 26 September 2017.
SUMMARY RATING RATIONALE
Global Credit Ratings has accorded the above credit rating to Accelerate Property Fund Limited’s Senior Secured Notes based on the following key criteria:
Accelerate is a newly incorporated property fund that listed on the JSE on 12 December 2013, with a mid-sized property portfolio valued at R6.15bn. The properties were drawn from the Georgiou family portfolio. Accelerate’s relationship to the much larger Georgiou family portfolio has ensured a natural pipeline of acquisitive opportunities, as well as an opportunity to leverage off the strong relationships the Georgiou family has in the property sector. The fund’s focus is to maintain a strong retail bias and currently 67% of the fund’s aggregate GLA is made up of retail properties. The remainder of the fund’s GLA is split between office (22%), industrial (7%) and specialised retail (4%), with 44% of the fund’s revenue coming from large national tenants.
The rating of the Notes was derived by applying a notching up approach, starting from the long term senior unsecured corporate credit rating of the Issuer. Based on the fundamentals and prospects of APF, GCR accorded APF Credit Ratings of ‘BBB+(ZA)/A2(ZA)’ on the long and short term respectively. With regards to the Notes, a rating uplift of 4 national scale notches was deemed appropriate for these particular Notes, given the ‘Superior Recovery Prospects’ of the Notes. GCR has thus accorded a final, public rating of AA-(ZA) accorded to the Notes with a ‘Stable’ outlook.
For more information on the Transaction and specific details of the Senior Secured Notes, please refer to the Secured Bond New Issuance Report entitled “Accelerate Property Fund – Senior Secured Notes”, to be published in September 2014. The New-Issuance report will be available to subscribers of GCR’s structured finance subscription service. GCR analysed the Transaction by applying its Criteria for Rating Property Funds (July 2014), Criteria for Rating Corporate Entities (August 2013) and its Global Structurally Enhanced Corporate Bonds Rating (October 2013). The criteria reports are available for download on the GCR website.
NATIONAL SCALE RATINGS HISTORY
Initial rating (Final, public) (September/2014)
Long term: AA-(ZA);
Last rating (Final, public) (September/2014)
Long term: AA-(ZA);
Sector Head: Structured Finance Ratings
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
- Global Structurally Enhanced Corporate Bonds Rating Criteria (Oct’13)
- Criteria for Rating Property Funds (Jul’2014)
- Criteria for Rating Corporate Entities (Aug’13)
- Accelerate Property Fund Limited Senior Secured Notes Pre-Funding Report (Aug’14)
- APF Corporate Rating Report (Feb’14)
RATING LIMITATIONS AND DISCLAIMERS
ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS . IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.NET/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.NET.
SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
The Issuer and the Arranger participated in the rating process via face-to-face meetings, teleconferences and other written correspondence. Furthermore, the quality of info received was considered adequate and has been independently verified where possible.
The rating/s above were solicited by the Issuer of the Transaction; GCR has been compensated for the provision of the ratings.
The credit rating/s has been disclosed to the Issuer and the Arranger with no contestation of the rating.
The information received from the Issuer and other reliable third parties to accord the credit ratings included the executed security agreements; the final signed programme memorandum; the final signed applicable pricing supplement; the final signed legal opinion; the final signed tax opinion; the Issuer’s Pre-Listing Statement; the applicable property valuation reports; historical property performance data; the Issuer’s Audited Financial Statements for the year ended March 2014 and the Issuer financial projections for 2014 to 2016.
GLOSSARY OF TERMS/ACRONYMS USED IN THIS PRESS RELEASE PER GCR’s STRUCTURED FINANCE GLOSSARY
|Applicable Pricing Supplement||A transaction document that describes the particulars of notes issued.|
|Corporate Credit Rating||A credit rating accorded to a corporate entity.|
|Credit Rating||A rating accorded to the performance of either ultimate or timely payment of obligations.|
|Credit Rating Agency||A party that provides an opinion on the credit quality of assets, debt securities and companies.|
|Credit Risk||The probability or likelihood that a borrower will not meet it’s debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).|
|JIBAR||Johannesburg Interbank Agreed Rate. A reference rate.|
|Legal Opinion||An opinion regarding the validity and enforceable of a transaction’s legal documents.|
|Lien||A right of retention of someone else’s property due to expensed money or labour on property acquires a lien until payment is made.|
|Liquidity Risk||The risk that a financial instrument cannot be traded on it’s market price due to the size of the market.|
|Long Term Rating||A credit rating based on the opinion of the ability to repay long term (more than a year) obligations.|
|Property||Movable or immovable asset.|
|Reference Rate||A rate that is the basis of the calculation such as JIBAR.|
|Stock Code||A unique code allocated to a publicly listed security.|
|Structured Finance||A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.|