Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's downgrades 13 J-REITs and confirms one

21 Apr 2009

Tokyo, April 21, 2009 -- Moody's Investors Service has downgraded the ratings of 13 real estate investment trusts and confirmed one. These actions conclude the reviews initiated on January 15, 2009.

The individual rating actions follow:

- Japan Real Estate Investment Corporation: downgraded to A1 from Aa3 (under review for possible downgrade) both the issuer rating and the senior unsecured long-term debt rating; outlook is stable.

- Japan Retail Fund Investment Corporation: downgraded to A2 from A1 (under review for possible downgrade) both the issuer rating and the senior unsecured long-term debt rating and confirmed P-1 short-term debt rating; outlook is negative.

- Nippon Accommodations Fund Inc.: downgraded to A2 from A1 (under review for possible downgrade) both the issuer rating and the senior unsecured long-term debt rating; outlook is negative.

- Nomura Real Estate Residential Fund, Inc.: downgraded to A2 from A1 (under review for possible downgrade) the issuer rating; outlook is negative.

- Frontier Real Estate Investment Corporation: downgraded to A2 from A1 (under review for possible downgrade) the issuer rating; outlook is negative. This action concludes the review initiated on February 19, 2008.

- TOKYU REIT, Inc.: confirmed A2 (under review for possible downgrade) both the issuer rating and senior unsecured long-term debt rating; outlook is negative.

- Japan Excellent, Inc.: downgraded to A3 from A2 (under review for possible downgrade) the issuer rating; outlook is negative.

- Hankyu REIT, Inc.: downgraded to A3 from A2 (under review for possible downgrade) the issuer rating; outlook is negative.

- Top REIT, Inc.: downgraded to A3 from A2 (under review for possible downgrade) the issuer rating; outlook is negative.

- United Urban Investment Corporation: downgraded to Baa1 from A3 (under review for possible downgrade) the issuer rating; outlook is stable.

-Premier Investment Company: downgraded to Baa1 from A3 (under review for possible downgrade) both the issuer rating and the senior unsecured long-term debt rating; outlook is stable.

- MORI HILLS REIT INVESTMENT CORPORATION: downgraded to Baa1 from A3 (under review for possible downgrade) both the issuer rating and the senior unsecured long-term debt rating; outlook is negative.

- Japan Hotel and Resort, Inc.: downgraded to Baa3 from Baa2 (under review for possible downgrade) the issuer rating; outlook is stable.

- Kenedix Realty Investment Corporation: downgraded to Ba1 from Baa2 (under review for possible downgrade) both the issuer rating and the senior unsecured long-term debt rating; outlook is negative.

The global credit crunch and financial crises have adversely affected the Japanese real estate investment trusts (J-REITs), particularly their ability to raise funds. Many are finding it increasingly difficult to raise funds from the stagnant equity market. In addition, financial institutions are growing reluctant to extend them loans, which has raised funding costs and shortened borrowing terms. The bond market has been nervous to the point that J-REITs' opportunities to issue bonds will be very limited. Some of the J-REITs have even been forced to dispose of properties to make partial payments upon refinancing.

The turbulence in the financial market has affected the real economy, accelerating the economic slowdown, as evidenced by the projection for negative GDP growth. Moody's has observed a rise -- albeit a slow one -- in vacancy rates and a decline in offering rents in the rental office market. Given financial institutions' growing reluctance to finance real estate properties, property prices are also declining. Official prices (from the Japanese government) as of January 2009 for both commercial and residential land were down, as were the appraisal values of properties owned by the REITs, regardless of asset type. Worsening real estate fundamentals look to continue in the near future, which will stress the J-REITs' business performance and financial results.

Thus, on January 15, 2009, Moody's placed the ratings of 14 J-REITs on review for possible downgrade.

In its review, Moody's focused on certain factors for both individual issuers and the sector, and its findings are stated below. Moody's believes that, in the J-REIT sector, these 14 J-REITs have high credit quality, and has no general concerns over their ability to raise funds from financial institutions at this point.

(1) Likelihood of raising funds from equity and leverage

Given the difficulties of raising funds from equity, Moody's believes that J-REITs may have to adopt even more conservative financial policies. Their policies -- already conservative -- may be stressed, given the high debt ratios relative to historical leverage and the difficulty of paying down debt by issuing new equity. The financial policies of many of the J-REITs reviewed have experienced some stress, and this is one of the factors driving the downgrades or the changes to outlooks.

(2) Relationships with banks and liquidity

As a result of the review, Moody's finds at this point that it has no immediate concerns over the 14 rated J-REITs' relationships with their banks, which allows for stable access to funds. However, we assume that the banks will remain cautious, and remain selective about lending to the sector for some time. Moreover, many of the J-REITs have limited amounts of cash (or cash equivalents) to cover debt maturing in the next 12 to 18 months, which will be a challenge to achieving financial stability.

(3) Debt profiles, i.e., the proportion of long- and short-term debt, as well as average funding terms

The debt management of most of the 14 rated J-REITs is more conservative than of others in the sector. However, their flexibility in finance policies may be stressed due to tighter funding conditions, i.e., rising funding costs, the growing proportion of short-term debt, and shorter funding periods, in an environment in which financial institutions are already taking increasingly conservative positions in extending loans to J-REITs.

(4) Impact of the economic slowdown on the stability of cash flow from rents and on real estate prices

In Moody's opinion, when the diversity in the portfolio, the quality and tenant attractiveness of the properties in the portfolio, tenant turnover, the structure of leases, and rents are taken into account, the economic downturn is having only a limited impact on the near-term cash flows of most the 14 rated J-REITs. However, Moody's assumes that the decline in offering rents for office buildings will become more marked. Moreover, cash flows may be pressured if a J-REIT's portfolio contains a significant proportion of performance-based rents for retail properties and hotels, or if the portfolio is dominated by luxury rental apartments.

The decline in property prices is affecting the portfolios of all the J-REITs. Moody's is concerned that the J-REITs are going to raise their market-value-based leverage, if the gap between appraisal values and acquisition prices (unrealized gains) is small at this point. According to the financial covenants of many of the loan agreements, appraisal values are used to calculate leverage. If the safety margin in the covenants were to decline, financial flexibility may be strained.

(5) Portfolio strategies

J-REITs may have to revamp their portfolio growth strategies if equity prices remain stagnant. For a J-REIT whose rating incorporates expectations for portfolio growth or mitigation of asset concentration risk, Moody's re-examined it based on the size and diversity of the portfolio at this point, as well as the J-REIT's ability to raise funds from the equity market. Thus, the fact that alleviating concentration may take some time led in part to the downgrades of some of the rated J-REITs.

In December 2008, the Japanese government and the Bank of Japan (BOJ) implemented a program to support the J-REIT sector. Development Bank of Japan Inc., as a designated financial institution, has already started providing loans to cope with the damage caused by the crisis, while the BOJ expanded the definition of "eligible collateral" to include J-REITs' loans and bonds.

The direct effect of these measures on the most of 14 rated J-REITs' credit quality has been limited up to this point, because their ability to raise funds from financial institutions has not been a concern. Moody's expects the government's proactive support to ease funding may improve the funding environment and will likely mitigate the financial stress across the J-REIT industry.

Rationales for each of the rating actions are provided on the individual press releases. For more information regarding the individual J-REITs, please refer to their Credit Opinions, which will be published in the near future.

Moody's previous rating actions follow:

- Japan Real Estate Investment Corporation: placed the Aa3 issuer and senior unsecured long-term debt ratings on review for possible downgrade on January 15, 2009.

- Japan Retail Fund Investment Corporation: placed the A1 issuer and senior unsecured long-term debt ratings on review for possible downgrade on January 15, 2009.

- Nippon Accommodations Fund Inc.: placed the A1 issuer and senior unsecured long-term debt ratings on review for possible downgrade on January 15, 2009.

- Nomura Real Estate Residential Fund, Inc.: placed the A1 issuer rating on review for possible downgrade on January 15, 2009.

- Frontier Real Estate Investment Corporation: placed the A1 issuer rating on review for possible downgrade on January 15, 2009.

TOKYU REIT, Inc: placed the A2 issuer and senior unsecured long-term debt ratings on review for possible downgrade on January 15, 2009.

- Japan Excellent, Inc.: placed the A2 issuer rating on review for possible downgrade on January 15, 2009.

- Hankyu REIT, Inc.: placed the A2 issuer rating on review for possible downgrade on January 15, 2009.

- Top REIT, Inc.: placed the A2 issuer rating on review for possible downgrade on January 15, 2009.

- United Urban Investment Corporation: placed the A3 issuer rating on review for possible downgrade on January 15, 2009.

- Premier Investment Company: placed the A3 issuer and senior unsecured long-term debt ratings on review for possible downgrade on January 15, 2009.

- MORI HILLS REIT INVESTMENT CORPORATION: placed the A3 issuer and senior unsecured long-term debt ratings on review for possible downgrade on January 15, 2009.

- Japan Hotel and Resort, Inc.: downgraded to Baa2 from Baa1 its issuer rating, and continued its review for a further possible downgrade on January 21, 2009

- Kenedix Realty Investment Corporation: downgraded to Baa2 from Baa1 its issuer and senior unsecured long-term debt ratings, and continued its review for a further possible downgrade on March 6, 2009

The methodology used in rating J-REITs is the "Rating Methodology for REITs and Other Commercial Property Firms" (January 2006), which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory.

Moody's Special Report "Japan Real Estate Investment Trusts: Assessing Debt Credit Quality During Financial Turmoil" (December 2008), can be found at www.moodys.com.

Tokyo
Takuji Masuko
VP - Senior Credit Officer
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 downgrades 13 J-REITs and confirms one
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​
Moodys.com