Announcements Corporate Rating Alerts

GCR withdraws ratings assigned to Accelerate’s Senior Secured APF12 Note, affirms the ratings on the remaining Notes

Rating Action

Johannesburg, 07 October 2021 – GCR Ratings (“GCR”) has withdrawn the long-term issue credit ratings assigned to the APF12 Note issued by Accelerate Property Fund Limited (“Accelerate”) following its full capital redemption.

Concurrently, GCR has affirmed the long-term issue ratings of A-(ZA)(EL) assigned to the existing Senior Secured Notes (“the Notes”). A Rating Watch Negative remains on all ratings.

Rated Entity / Issue Rating class Rating scale Rating* Outlook / Watch
Senior Secured APF04 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF06 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF07 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF09 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF10 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF11 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF12 Notes Long Term Issue National WD —
Senior Secured APF14 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF15 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative
Senior Secured APF16 Notes Long Term Issue National A-(ZA)(EL) Rating Watch Negative

*The Senior Secured Note ratings are based on an estimate of the expected loss in the event of an issuer default and are a function of the estimated probability of default of the issuer and the potential losses that may be incurred. As such, these ratings carry an “(EL)” suffix. The expected loss ratings assigned to the notes issued therefore differs from the ‘BBB(ZA)’ long-term senior unsecured credit rating of the Issuer.

Rating Rationale

The ratings on the Notes is derived by notching up from the national scale long term issuer rating assigned to Accelerate Property Fund Limited (“Accelerate”, “the Issuer”) to BBB-(ZA), Rating Watch Negative. GCR’s modelled assumptions for the Senior Secured Note indicate that the stressed recovery rate has declined to 79.1%, from 81.6% at the August 2021 review. Nevertheless, a rating uplift of three national scale notches was still deemed to be appropriate for the Senior Secured Notes, on the expectation that recoveries will improve following the sale of non-core assets.

Outlook Statement

The Rating Watch Negative reflects the potential for additional downgrades to the Issuer if the proposed assets sales and the refinancing activity are not timeously concluded.

Rating Triggers

A downgrade of the issuer ratings would necessarily translate to a downgrade of the ‘EL’ ratings. Additionally, if a continuous deterioration in recovery prospects on the EL ratings is observed, this could also result in downward rating pressure. The rating outlook could return to stable if the Issuers’ operating performance stablises, alongside the conclusion of the asset sales and refinancing agreements.

Analytical Contacts

Primary analyst Eyal Shevel Sector Head: Corporate Ratings
Johannesburg, ZA Shevel@GCRratings.com +27 11 784 1771
Committee chair Sheri Morgan Senior Analyst: Corporate Ratings
Johannesburg, ZA Morgan@GCRratings.com +27 11 784 1771

Related Criteria and Research

Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Real Estate Investment Trusts and Other Commercial Property Companies, May 2019
Criteria for Secured Bond Expected Loss Credit Ratings, July 2021
GCR’s Country Risk Score report, published October 2021
GCR’s SA Sector Risk Score report, published April 2021
Accelerate Property Fund Limited Rating Announcement, 25 August 2021

Ratings History

Accelerate Property Fund Limited

Rating class Review Rating scale Rating Outlook/Watch Date
Long term Issuer Initial National BBB+(ZA) Stable Outlook Feb 2014
Short Term Issuer Initial National A2(ZA)
Long term Issuer Last National BBB-(ZA) Rating Watch

Negative

 Aug 2021
Short Term Issuer Last National A3(ZA)
Stock Code Review Rating scale Rating* Outlook/Watch Date
APF04 Initial National AA-(ZA) Stable Oct 2016
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF06 Initial National AA-(ZA) Stable Aug 2017
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF07 Initial National AA-(ZA) Stable Jun 2018
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF09 Initial National AA-(ZA) Stable Jul 2018
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF10 Initial National AA-(ZA)(EL) Stable Oct 2019
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF11 Initial National AA-(ZA)(EL) Stable Oct 2019
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF12 Initial National A(ZA)(EL) Negative Aug 2020
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF14 Initial National A(ZA)(EL) Negative Sep 2020
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF15 Initial National A(ZA)(EL) Negative Feb 2021
Last National A(ZA)(EL) Rating Watch Negative Aug 2021
APF16 Initial National A(ZA)(EL) Negative Jun 2021
Last National A(ZA)(EL) Rating Watch Negative Aug 2021

SALIENT POINTS OF ACCORDED RATINGS

GCR affirms that a.) no part of the ratings process was 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; and c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument.

The credit ratings have been disclosed to Accelerate Property Fund Limited. The ratings above were solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the ratings.

Accelerate Property Fund Limited participated in the rating process via face-to-face management meetings, tele-conferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.



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