Announcements

GCR accords a final, public AA-(ZA) rating to Accelerate Property Fund’s APF03 Senior

Johannesburg, 07 August 2015 — Global Credit Ratings (‘GCR’) has accorded a final, public long term rating of ‘AA-(ZA)’ with a ‘Stable’ outlook to the APF03-Senior Secured Notes (cumulatively APF01, APF02 and APF03 referred to as the ‘Senior Notes’) to be issued by Accelerate Property Fund Limited (‘Accelerate’) under its R5bn DMTN Programme, in August 2015.

  1. ZAR R452m* Senior Secured Notes, stock code APF03, coupon 3M JIBAR + 175 bps, maturing August 2018.

    2. Concurrently, GCR has affirmed the final, public long term ratings of ‘AA-(ZA)’ with ‘Stable’ outlooks accorded to the APF01 and APF02 Senior Secured Notes issued by Accelerate Property Fund Limited under its R5bn DMTN Programme, in September/October 2014.

  2. ZAR R264m Senior Secured Notes, stock code APF01, coupon 3M JIBAR + 170bps, maturing 26 September 2017.
  3. ZAR R285m Senior Secured Notes, stock code APF02, coupon 3M JIBAR + 230bps, maturing 26 September 2019.

* APF offered APF01 Noteholders a swap for APF03 Notes, therefore as per the SENS announcement on 05 August 2015, the

quantum of APF01 notes outstanding reduced by R152m to R264m and the size of the APF03 notes issuance increased to R452m. In terms of capital outstanding this is expected to have a zero net effect (as done on a R1 for R1 basis). However, a

marginal impact was noted on the recoveries given the increased spread attained on the APF03 notes.

SUMMARY RATING RATIONALE

Global Credit Ratings has accorded the above credit ratings to Accelerate Property Fund Limited’s Senior Secured Notes based on the following key criteria:

Accelerate is a property fund that listed on the JSE on 12 December 2013, with a mid-sized property portfolio valued at R6.77bn as at 31 March 2015. The fund’s focus is to maintain a strong retail bias, and currently 63% of the fund’s aggregate GLA is made up of retail properties. The remainder of the fund’s Gross Lettable Area (‘GLA’) is split between office 21%, industrial 12% and specialised retail 4%, with 52% 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)’, affirmed in March 2015, 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 public ratings of AA-(ZA) 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 Tap Issuance Report entitled “Accelerate Property Fund – Senior Secured Notes – Tap Issuance Report”, to be published in August 2015. The Tap-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 (April 2015); Global Structurally Enhanced Corporate Bonds Rating Criteria (October 2014); Criteria for Rating Corporate Entities (February 2015); Accelerate Property Fund Rating Report (March 2015) and with reference to its Accelerate Property Fund Limited Senior Secured Notes New-Issuance Report (October 2014). The criteria reports are available for download on the GCR website.

NATIONAL SCALE RATINGS HISTORY

Initial rating (Final, public)

APF01 (September/2014)

Long term: AA-(ZA);

Outlook: Stable

APF02 (October/2014)

Long term: AA-(ZA);

Outlook: Stable

APF03 (August/2015)

Long term: AA-(ZA);

Outlook: Stable

Last rating (Final, public)

APF01 (October/2014)

Long term: AA-(ZA);

Outlook: Stable

APF02 (October/2014)

Long term: AA-(ZA);

Outlook: Stable

APF03 (August/2015)

Long term: AA-(ZA);

Outlook: Stable

ANALYTICAL CONTACTS

Primary Analyst

Mark Vrdoljak

Analyst

(011) 784-1771

markvrd@globalratings.net

Committee Chairperson

Emma-Jane Fulcher

Sector Head: Structured Finance Ratings

(011) 784-1771

fulcher@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

Criteria for Rating Property Funds (April 2015);

Global Structurally Enhanced Corporate Bonds Rating Criteria (October 2014);

Criteria for Rating Corporate Entities (February 2015);

Accelerate Property Fund Rating Report (March 2015);

Accelerate Property Fund Limited Senior Secured Notes New-Issuance Report (October 2014).

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 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.
   

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 information 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:

  • Signed Executed Security Agreements.
  • Programme Memorandum.
  • Signed Applicable Pricing Supplements for APF01, APF02 and APF03.
  • Permitted Facilities breakdown.
  • Final Signed Legal and Tax Opinions.
  • Applicable Property Valuation Reports.
  • Historical Property Performance Data.
  • Accelerate’s Audited Financial Statements for the year ended 31 March 2014 and 31 March 2015.
  • Accelerate’s Financial Projections for 2014 – 2016.
  • Accelerate’s Property Performance data for the year 1 April 2014 to 30 March 2015.
  • Signed confirmation letter confirming non-dual cession of the properties and that the buildings are insured as per best business practice.
  • The findings of a site visit conducted by analysts from GCR’s corporate and structured finance teams.

GCR accords a final, public AA-(ZA) rating to Accelerate Property Fund’s APF03 Senior Secured Notes

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