JPY 6 billion in specified bonds affected
Tokyo, March 19, 2010 -- Moody's Investors Service has assigned Aa2 and A3 ratings to the Specified
Bonds issued by TMK Dream Logistics Fund.
The transaction is a CMBS transaction backed by distribution facilities.
The ratings for the Specified Bonds A and B address the expected loss
posed to investors by the legal final maturity. The structure allows
for ultimate payments of interest and principal by the legal final maturity.
Other non-credit risks, such as those associated with the
timing of principal prepayments and the payment of prepayment penalties,
have not been addressed and may have a significant effect on yield to
investors.
The ratings and transaction summary follow:
Issuer: TMK Dream Logistics Fund
Closing Date: March 19, 2010
Expected Maturity: March 18, 2015
Legal Final Maturity: March 18, 2017
Payment Frequency: Quarterly
Fiscal Agent: The Sumitomo Trust and Banking Co., Ltd.
(Aa3/P-1)
Asset Manager: Diamond Realty Management Inc. (DRM)
Underlying Properties: Five distribution facilities in Tokyo Metropolitan
and Kyushu areas
Class, Amount, Interest, Rating, Credit Support*
Specified Loan, JPY 6.47 billion, fixed, NR,
48%
Specified Bond A, JPY 3.5 billion, fixed, Aa2,
20%
Specified Bond B, JPY 2.5 billion, fixed, A3,
0%
* The formula used to calculate the credit support for this transaction
follows:
Credit support %: A / B
A: Total principal amount of the debt subordinate to the rated bond
B: Total amount of Specified Loan and Specified Bonds A and B (JPY
12.47 billion)
Moody's LTV: 47.8% for Specified Bond A and 59.1%
for Specified Bond B = Total amount of the rated bond and the debt
senior to the rated bond / Moody's Value for the properties.
Moody's Stressed DSCR: 1.91x for Specified Bond A and 1.54x
for Specified Bond B = Moody's Net Cash Flow / (Total amount of
the rated bond and the debt senior to the rated bond x a 6.25%
Loan Constant)
Moody's assigned provisional ratings of (P)Aa2 to the Specified Bond A
and (P)A3 to the Specified Bond B on March 2, 2010.
STRUCTURE OUTLINE
The Issuer purchased the properties with classified debt and preferred
equity.
The ratings are for the Specified Bonds A and B junior to the Specified
Loan.
Interest payments on the rated bonds will depend on a cash flow from the
properties. WF at the Issuer level is sequential. DRM --
as the Asset Manager -- will operate the Issuer during the
term.
The transaction has a 2-year tail period between the expected and
the legal final maturities.
After the expected maturity, the work-out process will commence
with the assignment of the control right -- for property
liquidation -- to each debt financer, from junior
to senior.
RATING OPINION SUMMARY
The transaction is a real estate securitization of five distribution facilities.
Moody's analysis focussed on 1) the competitive nature of the distribution
facilities in their individual sub-markets, 2) the credit
support provided by the senior/subordinate structure, and illustrated
by the loan-to-value (LTV) and the stressed DSCR,
3) the legal and structural integrity of the transaction, and 4)
support for the transaction by the originator group.
The properties are five distribution facilities in the Tokyo Metropolitan
and Kyushu areas. They have high grade building specifications,
good locations for the distribution business, and stable long-term
lease agreements with tenants.
The buildings have scarcity value. Additionally, the long--term
lease agreements with the tenants assist in the stability of the transaction's
cash flow and the liquidity of the properties.
V SCORE AND PARAMETER SENSITIVITIES
Moody's V Scores provide a relative assessment of the quality of available
credit information and the potential variability around the various inputs
to a rating determination. The V Score for this transaction is
Medium, which is same as the Medium V Score assigned to the Japanese
Single Borrower CMBS sector. For this transaction, our consideration
included the great deal of experience of the originator's group in development,
operation and securitization of real estate.
Parameter Sensitivities are not intended to measure how the rating of
the security might migrate over time, but to provide a quantitative
calculation of how the initial rating might change if key input parameters
used in the initial rating process differed from those Moody's used as
key parameters in Moody's Value for this transaction.
Moody's has used high stressed values by stressing Moody's net cash flow
and caprate. To determine Moody's Value, we have posited
three cases, with 5%, 15%, or 25%
value cuts. The value cuts give rise to changes in the model-indicated
Parameter Sensitivity from the initial ratings to Aa3, A2 and Baa1
for the Specified Bond A, and Baa1, Baa3 and Ba3 for the Specified
Bond B.
The special report, "V Scores and Parameter Sensitivities in the
Asian CMBS Sector," is available on www.moodys.com.
REFERENCE TO RELEVANT METHODOLOGY
The principal methodology used in rating this transaction was "Updated:
Moody's Approach to Rating CMBS Transaction in Japan" (April 2007),
which can be found at www.moodys.com in the Research &
Ratings directory, in the Rating Methodologies subdirectory.
Other methodologies and factors that may have been considered in the process
of rating this issue can also be found in the Rating Methodologies subdirectory.
Further information on Moody's analysis of this transaction is available
on www.moodys.com. In addition, Moody's publishes
a weekly summary of structured finance credit, ratings and methodologies,
available to all registered users of our website, at www.moodys.com/SFQuickCheck.
Moody's Investors Service is a publisher of rating opinions and research.
It is not involved in the offering or sale of any securities, nor
is it acting on behalf of the offering party. This release is not
a solicitation or a recommendation to buy, hold, or sell securities.
Tokyo
Mitsuru Sukigara
Vice President - Senior Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Tetsuji Takenouchi
Senior Vice President - Team Leader
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's assigns Aa2 and A3 ratings to Dream Logistics Fund