Johannesburg, December 18, 2013 -- The following release represents Moody's Investors Service's summary
credit opinion on Redefine Properties Limited and includes certain regulatory
disclosures regarding its ratings. This release does not constitute
any change in Moody's ratings or rating rationale for Redefine Properties
Limited. Moody's current ratings on Redefine Properties Limited
are:
Long Term Issuer Rating (domestic currency) ratings of Baa3
Short Term Issuer Rating (domestic currency) ratings of P-3
National Scale Rating - Long Term Issuer Rating (domestic currency)
ratings of A3.za
National Scale Rating - Short Term Issuer Rating (domestic currency)
ratings of P-2.za
National Scale Rating - Other Short Term (domestic currency) ratings
of P-2.za
National Scale Rating - Senior Unsecured Medium-Term Note
Program (domestic currency) ratings of A3.za
RATINGS RATIONALE
Redefine Properties Limited's (Redefine) Baa3/A3.za rating
is underpinned by a relatively moderate sized portfolio of predominantly
South African properties with a modest occupancy rate (93.1%
and 94.2%, as reported by the company as of H1 2013
(28 February 2013) and financial year end (FYE) 2012, respectively),
that produces stable earnings before interest, tax, depreciation
and amortization (EBITDA) margins. The company has developed a
diversified offshore property exposure directly and through its holding
in Redefine International Plc (RI Plc), with property investments
in the UK, Germany, Switzerland and Australia. For
the last twelve months (LTM) ended 28 February 2013, adjusted fixed
charge cover was 3.4x, leverage (defined as net adjusted
debt/recurring EBITDA) was 3.8x and adjusted total debt/gross assets
was 29.5% which is solidly positioned for its ratings category.
Key constraints on the rating however include (1) the large proportion
of secured debt in the company's capital structure representing 86%
of total debt and; (2) the sizable debt maturities approaching over
the next 3 years.
Stable Outlook
The rating outlook reflects Moody's view that Redefine will continue to
produce steady rental income, make well-conceived investments
and produce good operating returns. The stable outlook assumes
the absence of large transformational acquisitions and that management
will maintain an adequate liquidity profile at all times.
What Could Change the Rating -- Up / Down
Upward pressure on the ratings could occur if (1) portfolio size and diversification
materially improves; (2) shows a good track record as a rated entity;
(2) continues to produce consistent credit metrics, maintaining
leverage, defined as adjusted total debt/gross assets, sustainably
below 30% and fixed charge coverage above 3.5x on a sustained
basis; and (3) improves the ratio of secured debt/property assets
to substantially below 25%.
Downward pressure on the ratings could emerge if (1) adjusted total debt/gross
assets exceeds 35% on a sustained basis; (2) fixed charge
coverage trends towards 2.5x; (3) the ratio of secured debt/property
assets remains above 35%; (4) unexpected difficulties integrating
acquisitions arise, having a negative impact on the operational
performance or cash flows of the company; or (5) there is a deterioration
of Redefine's liquidity risk profile.
The principal methodology used in this rating was the Global Rating Methodology
for REITs and Other Commercial Property Firms published in July 2010.
Please see the Credit Policy page on www.moodys.com for
a copy of this methodology.
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn"
country modifier signifying the relevant country, as in ".mx"
for Mexico. For further information on Moody's approach to national
scale credit ratings, please refer to Moody's Credit rating Methodology
published in October 2012 entitled "Mapping Moody's National Scale
Credit Ratings to Global Scale Credit Ratings.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery
Please see Moody's Ratings Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the time horizon in which a credit rating action may be after a review
or outlook action took place.
Please see the ratings tab on the issuer page on www.moodys.com
for the last action and the history of the rating. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
to it. Please see the ratings disclosure page on our website www.moodys.com/disclosures
for further information.
Please see the ratings disclosure page on www.moodys.com/disclosures
for disclosures on significant Moody's shareholders and on certain
relationships between Moody's, its shareholders and/or rated
issuers.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Glossary: this press release contains within the main body of the
text definitions of any defined terms or acronyms used within it.
Moody's various ratings symbols, rating scales and other ratings-related
definitions can be found in the MIS Rating Symbols and Definitions guide
at www.moodys.com.
1. No part of this rating action was influenced by any other business
activities of Moody's Corporation-- i.e. this
rating action was not affected by the existence of, or potential
for, other business relationships between Moody's Investors
Services or its affiliates and the Rated Entity or its affiliates,
or the non-existence of any such relationships.
2. This rating action was based solely on the merits of the obligor(s)
or instrument(s) being rated.
3. This rating action was an independent evaluation of the risks
and merits of the obligor(s) or instrument(s) assessed in this rating
action and is subject to the potential limitations of the credit rating
disclosed with this rating action.
Please see www.moodys.com for any updates on changes to
the lead analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Dion Bate
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service South Africa (Pty) Ltd.
The Forum
2 Maude Street
2196 Sandton
Johannesburg
South Africa
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
David Staples
MD - Corporate Finance
Corporate Finance Group
Telephone: 00971 4237 9536
Releasing Office:
Moody's Investors Service South Africa (Pty) Ltd.
The Forum
2 Maude Street
2196 Sandton
Johannesburg
South Africa
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's Disclosures on Credit Ratings of Redefine Properties Limited
