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Rating Action:

Moody's rates (P)Ba3 (sf) / (P)A2.br (sf) the 59th Series of certificates issued by RB Capital Securitizadora S.A., a Brazilian securitization of guaranteed tenancy agreements

 The document has been translated in other languages

Global Credit Research - 13 Apr 2011

Approximately BRL 320 million of certificates rated

Sao Paulo, April 13, 2011 -- Moody's América Latina (Moody's) has assigned provisional ratings of (P)A2.br (sf) (National Scale, Local Currency) and of (P)Ba3 (sf) (Global Scale, Local Currency) to the first issuance of the 59th Series of certificates issued by RB Capital Securitizadora S.A. (RB Capital or the issuer).

Issuer: RB Capital Securitizadora S.A. -- 59th Series

Approximately BRL 320,000,000 certificates rated (P)Ba3 (sf) / (P)A2.br (sf)

RATINGS RATIONALE

The 59th Series of Certificates (CRIs) issued by RB Capital is backed by current and future tenancy agreements and is collateralized by the real estate assets by means of a fiduciary assignment ("alienação fiduciária de imóveis") and a guarantee issued by the sponsor of the transaction, BR Properties S.A. The real estate assets collateralizing the CRIs are three commercial properties (office buildings).

BR Properties has a corporate family rating of A1.br (National Scale, Domestic Currency) and Ba2 (Global Scale, Foreign Currency), and a senior unsecured rating of (P)Ba3 (Global Scale, Foreign Currency).

The ratings of the certificates are based, among others, on the following factors:

- The structure of the transaction, which will fully match payments due under the tenancy agreements guaranteed by BR Properties to payments due under the rated certificates;

- The ability and willingness of BR Properties, which has a senior unsecured debt rating of (P)Ba3 (Global Scale, Foreign Currency), to guarantee the payments. Very limited credit was given to recoveries arising from the liquidation of the real estate assets, or to the credit quality of the tenants in the underlying tenancy agreements; and,

- The structural and legal features of the transaction, including early termination and early liquidation events applicable to the various parties to the transaction and to BR Properties in particular; such events, if materialized, require a decision, to be voted in a general meeting of certificate holders, as to whether or not to liquidate the real estate properties assigned to the benefit of the certificate holders.

The final legal maturity date of the CRIs will be 120 months from issuance (December 16, 2020). Interest and principal will be paid monthly according to a predefined amortization schedule. The interest rate is TR plus a spread of 10.3% per annum. Whereas the CRIs have already been issued, the public prospectus is still under review by Brazil´s securities regulator (CVM). The provisional ratings assigned will become definitive ratings after the public prospectus is deemed definitive.

Moody´s views the certificates as being "pass through" securities of the underlying guaranteed tenancy payments. The ratings mainly reflect the guarantee provided by BR Properties S.A. and, to a limited extent, the collateral.

The key steps to the transaction are:

1. Tenancy Agreements are entered into between the Transferors (various entities owned and controlled by BR Properties) and respective Tenants outside of BR Properties Group. Conditional Tenancy Agreements are entered into between the Transferors and the Conditional Tenant (BRPR XII, a fully owned BR Properties entity) with the effect of making the latter liable for the payments of rent in the case of shortfalls. The conditional tenancy agreements assures that the shortfall payments are covered by BRPR XII, covering the risk of vacant units or units that become unoccupied during the transaction and/or delinquent tenant payments;

2. Transfer, by the Transferors to the Issuer, of the credit rights pursuant to current and future Tenancy Agreements, with payment of the transfer price equal to BRL 320 million, equal to the CRI issuance proceeds;

3. In order to assure the timely payment of principal and interest:

(a) the Transferors pledged the properties to the Issuer under fiduciary regime ("alienação fiduciária");

(b) BR Properties issued a guarantee in favor of the Transferors and the Issuer as beneficiary. The guarantee is structured as to ultimately guarantee the cash flows backing the principal and interest payments on the CRIs, covering a wide range of risks such as payment mismatches and interest rate mismatches;

4. The Issuer issues "Cédulas de Crédito Imobiliário" (CCIs) representing the underlying transaction credit rights. The Issuer then issues the CRIs through CETIP, backed by the credits represented in the CCIs.

5. Investors purchase the CRIs;

6. The Issuer pays the Transferors for the transfer of the credit rights out of issuance proceeds;

7. Cash payments made by the Tenants or the Conditional Tenant are made directly into the Issuer's account ("Conta Centralizadora") held at Banco Itaú Unibanco S.A.; and,

8. Amounts deposited in the Issuer's account will be used to make payments on the CRIs through the CETIP clearinghouse. Excess cash flows will return to BR Properties.

The Fiduciary Agent must notify CRI holders in the event of corporate restructuring or reorganization of BR Properties. Investors have then the option to request early amortization of the outstanding CRIs.

The (P)A2.br (sf) / (P)Ba3 (sf) ratings assigned to the CRIs are mainly based on BR Properties' ability to make payments under the guarantee. This is commensurate with BR Properties' (P)Ba3 senior unsecured debt rating. Any future changes to the senior unsecured debt rating of BR Properties may lead to a change in the ratings assigned to the certificates.

The main uncertainty of the transaction relates to its legal complexity which presents the risk of non-perfection of interest on the collateral; furthermore, there might be challenges to the (i) adequate formalization and issuance of the CRIs (ii) validity of the transfer of credit rights, and/or (iii) validity of the fiduciary assignment of the real estate collateral, among others. Such legal challenges may pose a risk to the transaction structure and negatively affect the receipt by investors of the promised amounts, including principal and interest. According to information received by Moody´s from legal counsel to the transaction, a potential challenge to the validity of the acquisition of the Buildings by BR Properties would not affect the obligations of repurchase (obrigação de retrocessão) of the outstanding CRIs covered by the guarantee in the transfer agreements.

BR Properties S.A. is an owner, manager, and developer of office and warehouse properties in the main economic regions of Brazil. The company was founded in December 2006 and is one of the largest publicly traded commercial property firms in Brazil with BRL 4.8 billion in total consolidated assets as of December 31, 2010.

BR Properties completed its Initial Public Offering in March 2010 and has since expanded its high quality portfolio through acquisitions. The company's consolidated portfolio, as of December 31 2010, comprises 95 commercial real estate properties (totaling 1.16 million sqm of GLA) and also 4 development projects (150 thousand sq m of GLA), concentrated in the buoyant real estate markets of São Paulo and Rio de Janeiro.

Moody's Ba2 (Global Scale, Foreign Currency)/A1.br (National Scale, Domestic Currency ) corporate family ratings and (P)Ba3 (Global Scale, Foreign Currency) senior unsecured rating reflect BR Properties' well-established commercial property presence in the southeastern and southern regions of Brazil.

The rating also reflects the company's modest leverage levels, strong EBITDA margins, and adequate fixed charge coverage. These strengths are counterbalanced by the company's small size, lack of unencumbered real estate assets and limited operating history as a public company.

The principal methodology used in assigning the ratings to the CRI was the Global Rating Methodology for REITs and Other Commercial Property Firms published in July 2010.

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

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, , public information, confidential and proprietary Moody's Investors Service's information.

Moody's considers the quality of information available on the transaction satisfactory for the purposes of assigning a credit rating.

Moody's America Latina's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".br" for Brazil. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Implementation Guidance published in August 2010 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

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.

Sao Paulo
Johann Grieneisen
Vice President - Senior Analyst
Structured Finance Group
Moody's America Latina Ltda.
JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

New York
Maria Muller
Senior Vice President
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's America Latina Ltda.
Avenida Nacoes Unidas, 12.551
16th Floor, Room 1601
Sao Paulo, SP 04578-903
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JOURNALISTS: 800-891-2518
SUBSCRIBERS: 55-11-3043-7300

Moody's rates (P)Ba3 (sf) / (P)A2.br (sf) the 59th Series of certificates issued by RB Capital Securitizadora S.A., a Brazilian securitization of guaranteed tenancy agreements
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.

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