Announcements

Emira Property Fund Secured Notes – EPF006 Notes Redemption and Rating Withdrawal; EPF007 Ratings

Johannesburg, 21 August 2018 — Global Credit Ratings (“GCR”) has withdrawn the final, public long-term credit ratings accorded to the following Senior Secured Floating Rate Notes issued by Emira Property Fund (“Emira” or the “Issuer”), following the full redemption of the Notes post their maturity date:

R303m Senior Secured Notes, stock code EPF006, due 19 August 2018; AA(ZA) Negative Outlook.

Concurrently, GCR has placed the final, public long-term credit ratings accorded to the following Senior Secured Floating Rate Notes issued by Emira ‘Under Review’:

R70m Senior Secured Notes, stock code EPF007,
due 2 September 2018; AA(ZA) Negative Outlook.

The ratings for the EPF007 Senior Secured Notes were scheduled to be reviewed on 21 August 2018. However, the Issuer has notified GCR that they intend on issuing new notes to replace the matured EPF006 Notes and as such, the review will be conducted together with the rating analysis in respect of the new notes to be issued. The pre-funding report for the new notes is anticipated to be issued by 31 August 2018. The existing rating for the above mentioned EPF007 Notes continues to be supported by GCR.

RATINGS HISTORY

Stock code
Initial rating
Long-term rating
Short-term rating
Outlook
EPF006
19 August 2015
AA(ZA)
n.a
Stable
EPF007
19 August 2015
AA(ZA)
n.a
Stable
Stock code
Last rating
Long-term rating
Short-term rating
Outlook
EPF006
19 September 2017
AA(ZA)
n.a
Negative
EPF007
19 September 2017
AA(ZA)
n.a
Negative

ANALYTICAL CONTACTS

Primary Analyst Secondary Analyst
Tinashe Mujuru Mark Vrdoljak
Structured Finance Analyst Senior Structured Finance Analyst
+27 11 784 1771 +27 11 784 1771
tinashem@globalratings.net markvrd@globalratings.net

Committee Chairman

Yohan Assous

Sector Head: Structured Finance Ratings

+27 11 784 1771

yohan@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

Global Master Structured Finance Rating Criteria, updated Feb’17.

Global Structurally Enhanced Corporate Bonds Rating Criteria, updated Nov ’17.

Global Master Criteria for Rating Corporate Entities, updated Feb ’18.

Global Criteria for Rating Property Funds and Commercial Real Estate Companies, updated Feb ’18.

Emira Property Fund Limited Corporate Report – May ’18.

Emira Property Fund Limited Group 1 Notes New Issuance Report – Aug’15.

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.

GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S STRUCTURED FINANCE GLOSSARY

Asset An item with economic value that an entity owns or controls.
Cash Flow A financial term for monetary changes in operations, investing and financing activities.
Credit Enhancement Limited protection to a transaction against losses arising from the assets. The credit enhancement can be either internal or external. Internal credit enhancement may include: Subordination; over-collateralisation; excess spread; security package; arrears reserve; reserve fund and hedging. External credit enhancement may include: Guarantees; Letters of Credit and hedging.
Creditor A credit provider that is owed debt obligations by a debtor.
Default A default occurs when: 1.) The Borrower is unable to repay its debt obligations in full; 2.) A credit-loss event such as charge-off, specific provision or distressed restructuring involving the forgiveness or postponement of obligations; 3.) The borrower is past due more than X days on any debt obligations as defined in the transaction documents; 4.) The obligor has filed for bankruptcy or similar protection from creditors.
Issuer The party indebted or the person making repayments for its borrowings.
Lease Agreement or temporary use and enjoyment of a corporeal thing (movable or immovable property) the whole or part thereof for rent. The essential elements of a contract of lease are: 1.) Undertaking of lessor to give the lessee the use and enjoyment of something; 2.) Agreement between the lessor and lessee that the lessee’s right to use and enjoyment is temporary; and 3.) Lessee’s undertaking to pay a sum or rent.
Long-Term Rating A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Principal The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Proceeds Funds from issuance of debt securities or sale of assets.
Rating Outlook A Rating outlook indicates the potential direction of a rated entity’s rating over the medium term, typically one to two years. An outlook may be defined as: ‘Stable’ (nothing to suggest that the rating will change), ‘Positive’ (the rating symbol may be raised), ‘Negative’ (the rating symbol may be lowered) or ‘Evolving’ (the rating symbol may be raised or lowered).
Receivables General term for economic benefit derived from an asset.
Recourse A source of help in a difficult situation.
Recovery The action or process of regaining possession or control of something lost. To recoup losses.
Refinance The issue of new debt to replace maturing debt. New debt may be provided by existing or new lenders, with a new set of terms in place.
Rent Payment from a lessee to the lessor for the temporary use of an asset.
Repayment Payment made to honour obligations in regards to a credit agreement in the following credited order: 3.) Satisfy the due or unpaid interest charges; 4.) Satisfy the due or unpaid fees or charges; and 5.) To reduce the amount of the principal debt.
Secured Creditor A creditor that has specific assets pledged as collateral that will receive the proceeds in the event of default.
Securities Various instruments used in the capital market to raise funds.
Securitisation Is a process of repackaging portfolios of cash-flow producing financial instruments into securities for sale to third parties.
Short-Term Rating A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
Stock Code A unique code allocated to a publicly listed security.
Timely Payment The principal debt, interest, fees and expenses being repaid promptly in accordance with the contractual obligation.
Tranche In a structured finance, a slice or portion of debt securities offered that is structured or grouped to resemble the same degree of risk associated with the underlying asset or with a similar degree of risk. A junior tranche has a higher degree of default risk than a senior tranche.
Transaction A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
Ultimate Payment A measure of the principal debt, interest, fees and expenses being repaid over a period of time determined by recoveries.

For a detailed glossary of terms, please click here.

SALIENT FEATURES OF ACCORDED RATINGS

GCR affirms that a.) no part of the ratings were influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the ratings 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 information received was considered adequate and has been independently verified where possible.

The ratings above were solicited by the Issuer of the Transaction; GCR has been compensated for the provision of the ratings.

The credit ratings have been disclosed to the Issuer and the Arranger.

The information received from the Issuer and other reliable third parties to accord the credit ratings included:

  • JSE market notice dated 14 August 2018 in respect of the redemption of the Notes.

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