Class X Notes not affected
Frankfurt am Main, April 08, 2011 -- Moody's Investors Service has today downgraded the Class A1 Notes issued
by Windermere IX CMBS (Multifamily) S.A. (amount reflects
initial outstandings):
EUR845M Class A1 Commercial Mortgage-Backed Notes due 2016 Certificate,
Downgraded to Aa1 (sf); previously on Oct 26, 2009 Confirmed
at Aaa (sf)
Moody's does not rate the Class A2 Notes, the Class B Notes and
the Class C Notes. The Class X rating is unaffected by today's
rating action.
RATINGS RATIONALE
The key parameters in Moody's analysis are the default probability of
the securitised loans (both during the term and at maturity) as well as
Moody's value assessment for the properties securing these loans.
Moody's derives from those parameters a loss expectation for the securitised
pool.
Today's rating action is triggered by the claim that was filed by
the City of Dresden against some Gagfah subsidiaries related to the WOBA
Dresden portfolio. The legal dispute risk is hardly quantifiable
and creates uncertainty around the financial situation of the borrowers
under the sole remaining loan in this transaction. This type of
risk is not deemed commensurate with the Aaa(sf) rating on the Class A
1 Notes, despite a moderate leverage of the loan and subordination
available to the Notes.
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.
MOODY'S PORTFOLIO ANALYSIS
According to Moody's understanding, the city of Dresden has
taken legal action against certain subsidiaries of Gagfah S.A.
("Gagfah"). The accusations center around the sale
of the city's former housing association WOBA Dresden to Gagfah
in 2006. According to both public press releases as well as press
releases from Gagfah, the city accuses the Gagfah entities to be
in breach of certain aspects of the sale and purchase agreement that WOBA
entities entered into at the time of the privatisation. The sale
of the WOBA entities included a number of obligations leaned towards a
social charta that aimed to protect the tenants and the housing association
as such. Gagfah has announced in a statement that in its view it
is in full compliance with all key terms of the social charta.
The WOBA loan is the sole remaining loan in the transaction after the
GSW loan repaid on the January 2011 IPD. The WOBA loan has been
granted to -- inter alia -- WOBA Dresden GmbH and some of its
subsidiaries, which Moody's expects to be involved in this
claim. The loan is syndicated and 50% of the loan is securitised
in Windermere IX CMBS (Multifamily) S.A.
Moody's has no details on the claim. Press articles citing
district court speakers quantify the amount of the claim to more than
EUR 1 billion. Furthermore, Moody's does not have information
about the validity of the claim that has been filed. Even though
Moody's does not yet have information about the entities that are
being indicted, it is likely that the WOBA group as a whole will
be under distress in case of a successful claim by the city of Dresden.
Moody's currently assumes that the security position of the WOBA
loan securing the bonds is still valid. Hence the rating action
was not triggered by changes impacting Moody's recovery assumptions
under the loan.
However Moody's believes that the claim exposes noteholders to two
types of risks: Firstly, the claim itself exposes even very
senior noteholders to a cliff risk. In an extreme scenario,
it could lead to a significant payment claim that cannot be met by the
borrowers under the WOBA loan. In this extreme scenario,
Moody's would expect the borrowers under the WOBA loan to default.
Secondly, Moody's expects that the claim could take months
or even years to resolve unless the parties to the claim agree on a settlement.
The WOBA loan matures in May 2013. The uncertainty created by the
unsolved claim makes the refinancing of the WOBA loan challenging.
Overall, the risk associated with the legal dispute is not commensurate
with a Aaa (sf) rating on the Class A Notes.
The sponsor's actions during the process of either court action
or out of court settlement might indicate the level of support to be expected
at the maturity date of the loan in May 2013. Moody's will
closely monitor the situation around the legal dispute.
RATING METHODOLOGY
The principal methodologies used in this rating were "Update on Moody's
Real Estate Analysis for CMBS Transaction in EMEA" published in June 2005.
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.
Moody's prior review is summarised in a Press Release dated 07 February
2011. The last Performance Overview for this transaction was published
on 14 January 2011. 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.
For updated monitoring information, please contact monitor.cmbs@moodys.com.
To obtain a copy of Moody's New Issuer 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 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.
Frankfurt am Main
Oliver Schmitt
Vice President - Senior Analyst
Structured Finance Group
Moody's Deutschland GmbH
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 Deutschland GmbH
An der Welle 5
Frankfurt am Main 60322
Germany
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's downgrades the Class A1 Notes issued by Windermere IX CMBS (Multifamily) S.A.