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Announcement:

Moody's affirms Aaa ratings of Notes issued by ING (UK) Listed Real Estate Issuer plc

20 Jul 2009

Ratings maintained following the recent restructuring

London, 20 July 2009 -- Moody's Investors Service has today affirmed the ratings of the Notes issued by ING (UK) Listed Real Estate Issuer P.L.C. (the "Issuer") (amounts reflect initial outstandings):

- GBP200,000,000 Primary Tranche of GBP225,000,000 Commercial Mortgage Backed Floating Rate Notes due 2015, rated Aaa; previously on 20 December 2005 assigned Aaa; and

- GBP25,000,000 Reserve Tranche of GBP225,000,000 Commercial Mortgage Backed Floating Rate Notes due 2015, rated Aaa; previously on 10 July 2006 assigned Aaa.

ING (UK) Listed Real Estate Issuer plc represents the securitisation of a single, non-amortising loan granted to ING (UK) Listed Real Estate (the "Borrower"), a Guernsey based property unit trust. Its ultimate parent, ING UK Real Estate Income Trust Limited, is a closed ended investment company listed on the London & Channel Islands Stock Exchanges. The transaction originally closed in December 2005 with the issuance of GBP200 million Primary Notes and was followed by the issuance of GBP25 million Reserve Notes in July 2006 which carry the same terms and conditions as the Primary Notes and rank pari passu with them.

The loan securitised in this transaction was initially backed by a portfolio of 54 properties located throughout the UK with a concentration in office (40.3% by underwriter's ("U/W") market value), retail (29.5%) and industrial (22.3%). The Borrower has the flexibility, through the investment manager (ING Real Estate Investment Management), to alter the composition of the securitised portfolio as long as the investment strategy and certain covenants in the transaction are satisfied.

Today's rating affirmation was prompted by Moody's adjusted expectations with respect to the current and future value of the properties securing the loan and the recent restructuring of the transaction as described below.

As per 15 May 2009, the Noteholders approved the following three amendments to the Issuer-Borrower Loan Agreement ("IBLA"): (i) an increase of the loan-to-value ("LTV") covenant from 50% to 60% until January 2012, when it will reduce to 55% and fall back to 50% in July 2012; (ii) an increase of the interest coverage ratio ("ICR") covenant to 1.75x from 1.50x until the loan maturity in January 2013; and (iii) a debt reduction by GBP35 million by January 2010 through one or more tender offers at par value of the Notes, with the first tender offer being held in July 2009 for a minimum of GBP15 million.

Moody's conducted a detailed review of the transaction concentrating on the actual performance of the transaction relative to the covenants and focused especially on (i) rental cash flow performance and tenancy profile; (ii) property quality, value and yield development; (iii) current state of the UK property market and prevailing market conditions; and (iv) impact of the recent amendments to the IBLA on the future transaction performance. Moody's analysis took into account its updated central scenarios, as described in Moody's Special Report "Moody's Updates on Its Surveillance Approach for EMEA CMBS".

As of the latest investor report dated 1 May 2009, the portfolio comprised of 48 properties with a concentration in office (46.3%), industrial (37.4%) and retail (11.6%). Since closing, also considering property disposals, the transaction has benefited from stable rental cash flows resulting in an average ICR of 2.6x (12-month forward looking). As of the latest investor report, the ICR was 2.6x compared with 3.0x as at closing and the original covenant of 1.50x. The portfolio vacancy (based on ERV) was 8.8%. The highest exposure to a single tenant (TNT UK Limited) was 8.3% of the total net rental income while the top five tenants in the portfolio represented 19.8% of total net rental income (versus a covenant of 40.0%). The weighted average remaining lease term was 9 years (versus a covenant of 4 years).

The portfolio is re-valued on a quarterly basis and as of May 2009 (per valuation dated March 2009) the aggregate value of the properties in the portfolio was GBP386.7 million, yielding an U/W LTV of 52.9% compared with 40.8% as at closing and the original covenant of 50.0%. In addition to the property disposals, Moody's notes that the property value of the portfolio has been negatively affected by the yield widening across the UK real estate market.

In case of a breach of the LTV covenant in the transaction, the excess cash from the property portfolio will be trapped in the transaction, to be released only upon the satisfaction of a cash release mechanism that is based on an U/W LTV of 35%. The breach of the LTV covenant as of the April 2009 IPD did not result in a cash trap as the LTV covenant was amended to a higher level (60%) during the cure period under the IBLA.

In an aim to reduce the LTV ratio in the transaction and in line with the recent amendment to the IBLA, Moody's is aware that the trustee of the Borrower has offered to purchase up to GBP35 million of the Notes from certain Noteholders in July 2009. Even though the details of the Note buyback have not been reported by the Servicer yet, Moody's understands that the Borrower has accumulated sufficient funds through property disposals from the securitised portfolio to purchase the GBP35 million Notes in full, ahead of the time as set out in the IBLA.

Moody's expects the value of the properties in the portfolio to fall further over the next years which ultimately has a negative impact on the refinancing risk when the single loan matures in January 2013. However, in Moody's opinion, the current rating of the Notes is commensurate with the expected loss posed to the Noteholders by the legal final maturity of the Notes considering the (i) healthy rental cash flows from the portfolio that can potentially be trapped within the structure; (ii) the increase of the ICR covenant to 1.75x from 1.50x; (iii) the covenanted GBP35 million Note buyback by latest January 2010; and (iv) the experience of the investment manager in the sector.

The principal methodologies used in rating and monitoring the transaction are "Update on Moody's Real Estate Analysis for CMBS Transaction in EMEA" June 2005 and "Moody's Updates on its Surveillance Approach for EMEA CMBS" March 2009, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Credit Policy & Methodologies directory.

The latest Performance Overview for the transaction has been published on 19 June 2009. Further information on Moody's analysis of this transaction is available on www.moodys.com.

London
Daniel Kolter
Managing Director
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

London
Deniz Yegenaga
Associate Analyst
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's affirms Aaa ratings of Notes issued by ING (UK) Listed Real Estate Issuer plc
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