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
Brazil
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
