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Fitch Ratings-Taipei/Hong Kong-16 October 2009: Fitch Ratings has today affirmed the ratings of the beneficiary certificates issued by Taiwan's Hung Tai Century Tower Real Estate Asset Trust (REAT), which is entrusted with part of the Hung Tai Century Tower, as follows:
TWD1,225m Class A Beneficiary Certificates affirmed at 'AAA(twn)'; Outlook Stable; and
TWD355m Class B Beneficiary Certificates affirmed at 'A(twn)'; Outlook Stable.
The affirmation follows a surveillance review of the transaction by Fitch and is supported by the adequate net operating cash flow generated by the entrusted property. Over the past year, the performance of the entrusted property has demonstrated high resistance to the weak economy and maintained a stable tenant portfolio. Given the fact that the entrusted property is located in the prime business district of DunBei/MingSheng, and is in close proximity to Taipei Songshan Airport - the main airport for direct charter flights between Taiwan and China, it is expected that the entrusted property may be able to attract new tenants and further reduce its current vacancy rate of 10% (as of end-September 2009).
The transaction's debt service coverage ratio (DSCR), defined as actual cash flow for debt service divided by actual debt service interest expenses, has been stable and above the DSCR trigger of 2x since closing. If the DSCR falls below 2x, the interest due to subordinated certificate holders will be trapped in the DSCR reserve account and may be released only if the DSCR trigger level is restored. According to the latest available trustee report as of 31 May 2009, the DSCR stood at 4.05x.
The ratings address the timely payment of interest and ultimate repayment of principal by the legal maturity date of June 2012. The beneficiary certificates are ultimately backed by cash flows generated by the entrusted property, as well as the land and property value.
Rating Outlooks have been published for all newly issued Asia Pacific Structured Finance tranches since June 2008, and concurrently with rating actions for tranches issued prior to June 2008. Unlike a Rating Watch which notifies investors that there is a reasonable probability of a rating change in the short term as a result of a specific event, rating outlooks indicate the likely direction of any rating change over a one- to two-year period.
Applicable Criteria available on Fitch's website at www.fitchratings.com: 'Global Structured Finance Rating Criteria', dated 30 September 2009.
Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(twn)' for National ratings in Taiwan. Specific letter grades are not therefore internationally comparable.
Contacts: Tino Jang, Taipei, +886 2 8175 7611; Henry Hung, Taipei, +886 2 8175 7612.
Media Relations: Karen Cho, Hong Kong, Tel: +852 2263 9935,
Email:
karen.cho@fitchratings.com.
Additional information is available at www.fitchratings.com.
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