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 four classes of CMBS Notes issued by DECO 6 -- UK Large Loan 2 plc

Global Credit Research - 03 Mar 2011

Rating of the Class A1 Notes affirmed

London, 03 March 2011 -- Moody's Investors Service has today downgraded the following classes of Notes issued by Deco 6 -- UK Large Loan 2 plc (amounts reflect initial outstandings):

....GBP259.9M Class A2 Notes, Downgraded to Baa1 (sf); previously on Jun 12, 2009 Downgraded to Aa3 (sf)

....GBP43.0M Class B Notes, Downgraded to B2 (sf); previously on Jun 12, 2009 Downgraded to Baa3 (sf)

....GBP49.1M Class C Notes, Downgraded to Caa2 (sf); previously on Jun 12, 2009 Downgraded to B1 (sf)

....GBP30.1M Class D Notes, Downgraded to Caa3 (sf); previously on Jun 12, 2009 Downgraded to Caa1 (sf)

At the same time, Moody's Investors Service has affirmed the Aaa (sf) rating of the GBP173.0M Class A1 Notes issued by Deco 6 -- UK Large Loan 2 plc. Today's rating action takes Moody's updated central scenarios into account, as described in Moody's Special Report "EMEA CMBS: 2011 Central Scenarios".

RATINGS RATIONALE

The key parameters in our analysis are the default probability of the securitised loans (both during the term and at maturity) as well as our value assessment for the properties securing these loans. We derive from those parameters a loss expectation for the securitised pool.

Based on Moody's revised assessment of these parameters, the loss expectation for the remaining pool, which now consists of three loans (compared to four at closing) has increased significantly since the last review in June 2009.

The rating affirmation of the Class A1 Notes is mainly driven by (i) current credit enhancement levels and (ii) low note-to-value (NTV) level.

The downgrade on Class A2, B, C, and D Notes is mainly caused by (i) Moody's increased refinancing default risk and loss assessment for the remaining loans in the pool; and (ii) high lease rollover risk affecting the Mapeley loan (46% of the current pool). As reported in the latest investor report (January 2011), the second largest tenant of the Mapeley property portfolio (27% of total rent) served notice to their lease which matures in September 2011.

The overall default probability of the remaining underlying loans as assessed by Moody's has increased compared to the last review in June 2009 due to a re-assessment of the refinancing risk. Moody's weighted average whole loan to value (LTV) ratio is considerable at 104%. The Mapeley loan exhibits a Moody's whole loan LTV of 101%. The two other loans, Brunel Shopping Centre (28% of current pool) and St Enoch Shopping Centre loan (26% of current pool), which show current Moody's whole loan LTVs of 116% and 96% respectively, are due to be repaid in April 2012. As Moody's expects limited increase in commercial property values in the next two years, these loans will be highly leveraged at their respective maturity dates in April 2012.

The ratings of the Classes of Notes are sensitive to the performance of the Mapeley loan and the success of the borrower to renew upcoming lease expiries or re-let vacated areas. Deterioration of rental cash flows would lead to higher default probability during the term and a lower property value. In addition, a more adverse lease profile will further increase the refinancing risk.

Primary sources of assumption uncertainty are the current stressed macro-economic environment and continued weakness in the occupational and lending markets. Moody's anticipates (i) delayed recovery in the lending market persisting through 2012, while remaining subject to strict underwriting criteria and heavily dependent on the underlying property quality, (ii) values will overall stabilise but with a strong differentiation between prime and secondary properties, and (iii) occupational markets will remain under pressure in the short term and will only slowly recover in the medium term in line with the anticipated economic recovery. Overall, Moody's central global scenario remains 'hooked-shaped' for 2011; we expect sluggish recovery in most of the world's largest economies, returning to trend growth rate with elevated fiscal deficits and persistent unemployment levels.

MOODYS PORTFOLIO ANALYSIS

As of the January 2011 interest payment date (IPD), the transaction's total pool balance was GBP367.8 million down by 34% since closing. This is mainly due to the repayment of the largest loan at closing (Canary Wharf Loan) in March 2006. The prepayment proceeds were applied modified pro-rata. As a result, three loans remain which are secured by 22 properties and mainly in use as retail (65%) and office (35%). The transaction structure provides for the allocation of amortisation and prepayment proceeds to the Notes switching from currently modified pro-rata to fully sequential subject to certain triggers that have not been hit to date.

Even though the Class A1 Notes and the Class A2 Notes were to rank pari passu in a post-enforcement scenario following the service of a Note acceleration notice, Moody's assesses the credit risk of the two Classes of Notes to be different as the pre-enforcement priority of payments should prevail in most cases for the remaining term of the transaction. In terms of sequential principal proceeds, the Class A1 Notes rank ahead of the Class A2 Notes in the pre-enforcement priority of payments, i.e. the Class A2 Notes are timely subordinated to the Class A1 Notes.

The Class A2, Class B, Class C and Class D Notes are timely subordinated or subordinated in the transaction's capital structure. Due to this additional leverage, the higher portfolio risk assessment has a relatively bigger impact on the expected loss of the more junior Notes than on the expected loss of the more senior Notes.

As of the last IPD, all of the remaining three loans in the portfolio were current and none of the loans are in special servicing or have defaulted since closing. The Brunel Shopping Centre loan is on the servicer watch list due a breach of debt service coverage ratio (DSCR) covenant which is ongoing since February 2006.

The largest loan is the Mapeley loan (46% of the pool) which is secured by an office portfolio located in regional towns spread throughout England, Scotland and Wales. Currently, the portfolio consist of 20 properties which are let to 21 tenants with the top-3 tenants contributing approximately 71% of total rental income. The current reported interest coverage ratio (ICR) is 1.35x (as of January 2011) with 50% of the surplus cash flow being trapped over a two-year period ending July 2011. The balance (currently GBP6.4 million) is placed in a deposit for any future loan and property payment requirements. This partially mitigates the existing adverse lease profile for this loan evidenced by a short weighted average (WA) lease to expiry or break of 2.6 years. In addition, the second largest tenant (27% of total rent) has notified the borrower that they will not renew the lease in September 2011 which will have a negative impact on the rental cash flows. In case this tenant vacates the single let property the overall vacancy of the 20 properties will be approximately 26% by area compared to 7% to date. The rental income (supported by the deposit) should enable the properties to cover the debt service even in case the second largest tenant of the portfolio leaves. Moody's property value of GBP170 million considers the (i) secondary quality of the properties and (ii) some potential rental income deterioration resulting mainly from the existing lease expiry profile. The refinancing risk for this loan which matures in July 2015, has increased considerable since Moody's last review based Moody's LTV ratio of 101% , the size of the loan and average quality of the portfolio. The refinancing risk is also depending on the success of the borrower to renew upcoming lease expiries and/or re-let vacated areas and thereby increase the WA lease (beyond the loan maturity date).

The Brunel Shopping Centre loan (28% of the pool) which matures in April 2012 is secured by a shopping centre located in Swindon town centre, approximately 80 miles west of London. Based on the valuation as of closing, the current underwriter's whole loan and securitized LTV is 83% and 78% respectively. The loan underperforms Moody's expectations as the whole loan projected DSCR is 0.91x as per January 2011 IPD and limited visibility exists regarding the duration of ongoing loan restructuring negotiations between the servicer and the borrower. Although some refurbishments were completed over the past two years, the vacancy level of the shopping centre remained stable at approximately 9%. Given the high Moody's whole LTV ratio of 116%, there is a very high likelihood that this loan will not repay as scheduled on its maturity date in April 2012. In its refinancing risk analysis Moody's also took into consideration (i) the large size of the whole loan; (ii) the long WA lease term of approximately 10.5 years but also the low exit debt yield; and (iii) the good quality of the asset. Moody's assumes an orderly work-out of this loan (i.e. no fire sale of the property) following loan maturity in 2012.

St Enoch Shopping Centre loan (26% of the pool). This GBP95 million loan is a 50% tranche of a syndicated loan secured by a prime shopping centre located in the centre of Glasgow. The property provides approximately 800,000 square feet of retail and restaurant area combined with a 750 space car park. The centre experienced a considerable refurbishment and extension (approximately 64,000 sq ft) over a two-year period ending late 2009/ early 2010. As a result some new tenants have been attracted over the past 12 months. However, the current vacancy by area remains high at 16% as per latest IPD and similar to January 2009 (17%). Given the high Moody's whole LTV ratio of 96%, there is a considerable risk that this loan will not repay as scheduled on its maturity date in April 2012. In its refinancing risk analysis Moody's also took into consideration (i) the large size of the whole loan; (ii) the WA lease term of approximately 7.3 years potentially offset by future rollover (approximately 25% in the next three years); and (iii) the prime quality of the (refurbished) asset. Moody's assumes an orderly work-out of this loan (i.e. no fire sale of the property) in the case of a loan default at its maturity date.

Portfolio Loss Exposure: Moody's notes the bifurcated nature of the loan pool and expects a considerable amount of losses on the securitised portfolio, mainly stemming from the Brunel Shopping Centre loan and to some extent from the St Enoch Shopping Centre and Mapeley loans. Given Moody's reduced property value and increased refinancing risk for these loans, the risk of potential losses arising for the Class A2, B, C and D Notes has increased resulting in the today's rating downgrade for these Classes of Notes.

RATING METHODOLOGY

The principal methodologies used in this rating were "Update on Moody's Real Estate Analysis for CMBS Transactions in EMEA" June 2005 and "Moody's Updates on its Surveillance Approach for EMEA CMBS" March 2009.

Moody's Investors Service did not receive or take into account a third party due diligence report on the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

The updated assessment is a result of Moody's on-going surveillance of commercial mortgage backed securities (CMBS) transactions. The last Performance Overview for this transaction was published on 8 December 2010.

For updated monitoring information, please contact monitor.cmbs@moodys.com. To obtain a copy of Moody's New Issue Report on this transaction, please visit Moody's website at www.moodys.com or contact our Client Service Desk in London (+44-20-7772 5454).

REGULATORY DISCLOSURES

The rating has been disclosed to the rated entity or its designated agents and issued with no amendment resulting from that disclosure.

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings and public information.

Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entity or its related third parties within the three years preceding the Credit Rating Action. Please see the ratings disclosure page www.moodys.com/disclosures on our website for further information.

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.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service 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 for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

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

London
Christophe de Noaillat
Senior Vice President
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades four classes of CMBS Notes issued by DECO 6 -- UK Large Loan 2 plc
No Related Data.
© 2018 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. 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 SUCH 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 appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. 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. It would be reckless and inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser.

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 appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000.

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