Intu (SGS) Finance PLC Series 3

Transcription

1 Presale: Intu (SGS) Finance PLC Series 3 Primary Credit Analyst: Stuart Nelson, London (44) ; stuart.nelson@standardandpoors.com Secondary Contact: Edward C Twort, London; edward.twort@standardandpoors.com Table Of Contents Sterling-Denominated Fixed-Rate Notes Series 3 (From A 5 Billion Issuance Program) Transaction Summary Strengths, Concerns, And Mitigating Factors Transaction Characteristics Tier Structure Additional Assets Credit Evaluation Scenario Analysis Key Performance Indicators Standard & Poor's 17g-7 Disclosure Report Related Criteria And Research NOVEMBER 3,

2 Presale: Intu (SGS) Finance PLC Series 3 Sterling-Denominated Fixed-Rate Notes Series 3 (From A 5 Billion Issuance Program) This presale report is based on information as of Nov. 3, The ratings shown are preliminary. This report does not constitute a recommendation to buy, hold, or sell securities. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. Series Preliminary rating Preliminary amount (mil. ) Note-to-value ratio (%) Expected maturity Interest (%) 3 A (sf) To be determined To be determined Transaction Participants Arrangers Parent Borrower Obligors Property administrators Issuer and obligor security trustee Issuer and obligor bank account provider, principal paying agent, calculation agent, registrar, paying agent, and transfer agent Borrower hedge counterparties Lloyds Bank PLC and UBS Ltd. Intu Properties PLC Intu (SGS) Finco Ltd. Intu (SGS) Finco Ltd., Intu (SGS) Ltd., Intu (SGS) Holdco Ltd., Intu Lakeside Ltd., Intu Watford Ltd., Braehead Glasgow Ltd., Braehead Park Investments Ltd., VCP (GP) Ltd., The Victoria Centre Partnership, VCP Nominees No. 1 Ltd., VCP Nominees No. 2 Ltd., Intu Properties Investments Ltd., Wilmslow (No. 3) General Partner Ltd., The Wilmslow (No. 3) Limited Partnership, W (No. 3) GP (Nominee A) Ltd., W (No. 3) GP (Nominee B) Ltd., Wilmslow (No. 3) (Nominee A) Ltd., Wilmslow (No. 3) (Nominee B) Ltd., Intu Derby Ltd., Intu Derby 2 Ltd., The Derby Investments Limited Partnership, Derby Investments General Partner Ltd., Derby Trustee No. 1 Ltd., and Derby Trustee No. 2 Ltd. as trustees of the Intu Derby Jersey Unit Trust, Derby Trustee No. 1 Ltd. and Derby Trustee No. 2 Ltd. as trustees of the Midlands Shopping Centre Jersey Unit Trust No.1; Chapelfield GP Ltd., Chapelfield LP Ltd., The Chapelfield Partnership, and Chapelfield Nominee Ltd. Intu Property Management Ltd., Intu Lakeside Property Management Ltd., Intu Braehead Property Management Ltd., Intu Watford Property Management Ltd., and Chapelfield Property Management Ltd. HSBC Corporate Trustee Company (U.K.) Ltd. HSBC Bank PLC HSBC Bank PLC, Bank of America N.A., and UBS AG Supporting Ratings Institution/role HSBC Bank PLC as issuer bank account provider and hedge counterparty Bank Of America N.A. as hedge counterparty UBS AG as hedge counterparty Ratings AA-/Negative/A-1+ A/Negative/A-1 A/Negative/A-1 NOVEMBER 3,

3 Transaction Summary Standard & Poor's Ratings Services has assigned its preliminary 'A (sf)' credit rating to Intu (SGS) Finance PLC's series 3 sterling-denominated fixed-rate notes that it will issue under its 5 billion program. The issuance of the series 3 notes is the second issuance from the funding platform that Intu Properties PLC (Intu) established in Intu owns some of the U.K.'s leading shopping centers. As of June 2014, Intu owns nine of the top 20 U.K. shopping centers based on the PMA Retail Score (Property Market Analysis LLP). The Intu (SGS) Finance transaction is a debt platform with the flexibility to raise debt of various types secured on ringfenced collateral. Intu (SGS) Finco Ltd. (the borrower in the transaction) uses the proceeds of its financing activities (whether through borrowing from the issuer or through other forms of third-party debt) to make loans to asset-owning companies within the security group (consisting of the obligors and the borrower). All senior debt within the security group ranks pari passu and benefits from a common security and covenants package, governed by a common terms agreement. Any future secured lender to the borrower will become a party to this agreement. Each obligor will guarantee the obligations of the other obligors, including those of the borrower's. The borrower has added the Derby and Chapelfield shopping centers, with a market value of million, to the collateral pool. The aggregate value of all the centers backing the loans will be 3.15 billion. The issuance will increase the series' loan-to-value (LTV) ratio to 47.70% from 46.70%, which is consistent with our preliminary 'A (sf)' rating, in our view. Our preliminary 'A (sf)' rating on the series 3 notes reflects our evaluation of the underlying real estate collateral. The rated notes will have a period between expected final and legal final maturity, where the shopping centers could be sold in a real estate workout to meet repayment by legal final maturity. Our analysis considers that the presence of pari passu term debt alongside the rated notes may result in a more complex recovery process in any workout scenario, with potentially lower recovery proceeds. Upon completion of this issuance, the debt profile will comprise the following: Intu (SGS) Finance's new 350 million series 3 sterling-denominated interest-only rated notes; Intu (SGS) Finance's existing 800 million series 1 and series 2 interest-only rated notes. The issuer may issue future notes on a pari passu basis up to a program limit of 5 billion. The issuer on lends each series' net proceeds through an intercompany loan. Further issuance could materially change the debt maturity profile. However, the overall debt profile has certain maturity limitations; and An interest-only term facility to the borrower from a bank syndicate. Strengths, Concerns, And Mitigating Factors Strengths The portfolio's income stream will remain stable, highly granular, and diversified. The top 10 tenant groups represent approximately 30% of the portfolio's income, and consist of established U.K. national retailers. No tenant NOVEMBER 3,

4 group will represent more than 5% of income. Prime shopping centers tend to attract greater footfall than competing retail offerings, which should support potential income generation over the transaction's life. Market trends continue to favor the defensive nature of prime shopping centers, with retailers reducing the number of retail locations to focus on such assets. Such centers are relatively scalable, as growth in retailer demand for a given location can be tapped by expanding a given center to leverage existing footfall and the appeal of an existing critical mass of retailers. The rated notes will have a period between expected final and legal final maturity, sufficient for the shopping centers to be sold in a real estate workout to meet repayment by legal final maturity. Concerns and mitigating factors Our analysis considers that borrower covenants under the transaction structure are generally more flexible than other typical European commercial mortgage-backed securities (CMBS) transactions, particularly in the Tier 1 operating environment (see "Tier Structure"). Our rating approach reflects the covenant package's general flexibility, taking into account levels at which restrictions begin to be placed on the borrower's flexibility. Nonetheless, despite the presence of property covenants which will restrict the portfolio's nature, we consider that the risk of weaker-quality assets being added to the portfolio may increase ratings volatility. The ability to raise debt up to a 50% LTV threshold may also result in ratings volatility, in our view. We note that the LTV will increase as a result of this issuance, although leverage will remain consistent with the preliminary 'A (sf)' rating. The lenders to the security group may include several different lenders in addition to the capital markets debt. However, secured lenders to the security group must accede to a common terms agreement that pools security and seeks to regulate enforcement, under the transaction documents. Our analysis considers that the presence of pari passu debt alongside the rated notes may result in a more complex recovery process in any workout scenario, with potentially lower recovery proceeds. Noteholders are exposed to property development risk within the portfolio. However, significantly increased property development activities would likely result in the borrower moving through the tier ratios and operating under increasingly tighter loan covenants (see "Tier Structure"). Asset disposals and substitutions are relatively unfettered in a Tier 1 and Tier 2 operating environment. However, sale and asset substitution criteria under the transaction documents are designed to maintain collateral quality and diversity. While the borrower is currently virtually fully hedged, the borrower is only required to maintain interest rate protection on a minimum of 75% of the debt. If interest rates rise, the ratings in this transaction could come under pressure related to unhedged risk. Further issuance could materially change the debt maturity profile. However, the overall debt profile has certain maturity limitations. Transaction Characteristics The security group comprises entities that own the shopping centers, and has a number of funding options under the transaction structure. The borrower, as group finance company, can request that the issuer issue sterling-denominated notes under the program, with proceeds on lent to the borrower. Issued notes have a legal final maturity of at least five years after the date of the maturity of the corresponding intercompany loan. NOVEMBER 3,

5 In addition, under the transaction structure, the borrower can raise senior secured pari passu debt by entering into a variety of credit facility agreements. The borrower can also enter into hedging transactions in order to hedge the security group's exposure to interest-rate risks. Within the security group, obligors are able to borrow from other obligors or entities outside the group (up to the higher of 45 million or 2% of adjusted collateral value) on an unsecured and subordinated basis. Each obligor guarantees the obligations of the borrower and the other obligors. NOVEMBER 3,

6 Security arrangements The borrower and the asset-owning companies will grant full first-ranking fixed and floating security to the issuer and their other lenders, allowing the appointment of an administrative receiver if an event of default occurs within the security group. All senior debt (including hedging arrangements) within the security group ranks pari passu and benefit from a common security and covenants package, governed by a common terms agreement. Any future secured lender to the borrower will become a party to this agreement. Liquidity facility and hedging arrangements The borrower may (and may become obliged to) enter into one or more liquidity facility agreements in order to meet certain obligations under its intercompany loan agreement with the issuer and certain other senior obligations. Alternatively, the borrower may comply with its obligations to obtain liquidity by creating a separate liquidity reserve for that purpose. At present, no liquidity arrangements have been entered into, nor any such reserve established. The transaction documents will require the borrower to hedge interest-rate exposures to certain pre-specified levels (see "Tier Structure"). The borrower will manage the security group's interest rate exposures by entering into hedging agreements with various hedge counterparties. Tier Structure Our analysis over time considers that borrower covenants under the proposed transaction structure are generally more flexible than other typical European CMBS transactions, where a static asset base secures a known amount of debt. In contrast, the security group in this transaction will operate within a tiered covenant regime. Borrower covenants are particularly flexible under the Tier 1 operating environment. While the transaction seeks to trade leverage for operational flexibility, the covenants under the tier structure would impose incremental restrictions and creditor protections if performance were to deteriorate. Operational and financial restrictions prevent the security group's ratios from deteriorating through its own actions, leading it to operate in a higher tier. Tier 1 This is the current operating environment, with an LTV ratio less than 55% and interest coverage ratio (ICR) of at least 1.6x. Within this tier, the borrower can make acquisitions and disposals, provided that it remains within the Tier 1 thresholds. Developments of up to 15% in value are permitted under the tiered covenant regime. Under the regime, 75% of senior debt must be hedged. The borrower can raise additional debt if it remains within the Tier 1 operating environment (although it may not raise additional debt that increases the LTV ratio beyond 50%; the LTV following this issuance will be 48%), provided that total debt falling due in any two-year period is less than 20% of portfolio value. In this tier, there is no requirement for a liquidity facility or reserve under the regime. NOVEMBER 3,

7 Tier 2 Within this transitional tier, when the LTV is less than or equal to 72.5% and the ICR is at least 1.4x, incremental structural protections are imposed under the regime. Acquisitions are permitted under the tiered covenant regime if there is no deterioration in ratios, while property developments of up to 10.0% in value are permitted. Under the regime, 75.0% of senior debt must still be hedged. A liquidity facility or reserve is required from the mid-point of the tier (i.e., when the LTV ratio is equal to 63.8%, or the ICR less than 1.5x) sufficient to cover the next quarter's interest, with a property manager appointed on a non-binding basis. Tier 3 Within this final tier, before a breach of the default covenants of an 80.0% LTV ratio or an ICR of 1.25x, a comprehensive covenant package applies, including a full cash sweep and liquidity provision of two quarters' interest. A property advisor is appointed to run the security group on behalf of its creditors. Covenant testing Covenant testing occurs biannually (or quarterly if in Tier 3), and is tested on a proforma basis in the event of a disposal or acquisition. The obligors will obtain and deliver a valuation report biannually. Under the Tier 3 operating environment, the trustee appoints the valuer. Breach of a financial covenant can be remedied at any time within 14 business days by depositing cash with the obligor security trustee (up to a maximum of two successive periods and not more than four times in any five year period), prepayment of debt, and/or addition of properties to the portfolio. Other structural protections will apply at all covenant levels to maintain collateral quality and diversity, despite the operational and financial flexibility provided to the security group, including the following requirements: To maintain at least four prime shopping centers within the group; To limit portfolio concentration to 50% within a given region (except for London and the South East); To maintain either one prime shopping center of at least 1.4 million square feet (sq. ft.) or two centers of at least 1.0 million sq. ft.; and To limit future joint ventures to 25% of the collateral pool. Additional indebtedness Third-party unsecured debt can be raised up to the greater of 45 million and 2% of collateral value under the transaction documents. This debt is not taken into account in covenant calculations. Additional Assets This issuance will see the addition of two further centers to the existing security group. As a result, the LTV will increase to 47.7% from 46.7%. NOVEMBER 3,

8 Table 1 Portfolio Asset Value at initial issuance (mil. ) Percentage of portfolio (%) Value at current issuance (mil. ) Percentage of portfolio (%) The initial portfolio Lakeside, Thurrock 1, , Braehead, Glasgow The Harlequin, Watford Victoria Centre, Nottingham LTV ratio (%) Additional assets Derby, Derby Chapelfield, Norwich Pro-forma LTV on new debt (%) Consolidated LTV ratio (%) 47.7 LTV--Loan to value. The tenant base within the portfolio will remain highly diversified, with exposure to many of the U.K.'s leading national retailers. The top ten tenants represent approximately 30% of passing rent. Table 2 Top 10 Tenant Groups Passing rent (mil. ) Passing rent (%) Arcadia Next Boots Primark H&M House Of Fraser Sportsdirect.com Monsoon Signet Dixons Carphone The weighted-average of unexpired tenancy terms is 6.3 years to first break NOVEMBER 3,

9 Chart 2 Derby Derby is a major shopping destination in Derby city center, with 1.3 million sq. ft. of retail space. The center was built in 1970 and was substantially renovated in Intu acquired the center from Westfield in early NOVEMBER 3,

10 Derby has approximately 180 shops, and Debenhams, Marks and Spencer, Cinema De Lux, and Sainsbury's anchor it. The center has approximately 3,750 parking spaces. Derby has approximately 2.2 million people who reside within a 45-minute drive time, ensuring a strong customer base. The Derby center received 24 million customer visits during As at the valuation date, Derby's occupancy level was 99%. The center generates approximately 27 million of net rental income per year. Table 3 Derby's Top 10 Tenants Passing rent (mil. ) Passing rent (%) Marks and Spencer Cinema de Lux Debenhams Arcadia NOVEMBER 3,

11 Table 3 Derby's Top 10 Tenants (cont.) Next Boots H&M New Look Monsoon Sainsbury's Chapelfield Chapelfield opened in 2005 and is the major shopping destination in Norwich city center, with 530,000 sq. ft. of retail space and 1,000 parking spaces. Chapelfield has approximately 90 shops and is anchored by House Of Fraser, with other tenants including H&M, River Island, Zara, Boots, and Clas Ohlson. NOVEMBER 3,

12 There are approximately 0.9 million people within an hour's drive of Chapelfield, which received 11.0 million visits during As at the valuation date, Chapelfield's occupancy level was 98%. The center generates approximately 14.4 million of net rental income annually. Table 4 Chapelfield's Top 10 Tenants Passing rent (mil. ) Passing rent (%) House Of Fraser H&M River Island Sports WorldInternational Boots Monsoon Clas Ohlson AFH Stores Signet Superdrug Economic Outlook U.K. economic recovery surprises on the upside. The U.K.'s economic recovery is gaining momentum. At the end of Q2 2014, U.K. GDP was back to its precrisis peak of mid-2008, unlike most eurozone (European Economic and Monetary Union) countries (see table 5). Greater consumer spending, and more recently some help from corporate investments and exports have driven the recovery. That said, GDP and retail sales, both on a per capita basis, are still below peak levels. The U.K. unemployment rate has shown a steady improvement. It has decreased to 6% at the end of August from a peak of 8.5% in November However, productivity is weak and real wage growth has been sluggish. This conundrum has led to the Bank of England putting any interest rate increases on hold. In our view, the first interest rise is likely to take place in Q1 2015, followed by more hikes later next year and in 2016 (see "Credit Conditions: Europe Decelerates (Again) Amid Rising Geopolitical Risks," published on Sept. 16, 2014). Inflation is no longer an immediate concern. It has gradually declined to 1.2% in September 2014 (below the central bank target rate of 2%) from its peak of 5.2% in September 2011, according to the Office of National Statistics. Despite this decrease, however, it is still higher than the current wage growth, which negatively impacts purchasing power. Following a period of negative or little growth between mid-2008 and early 2013, retail sales have been steadily rising since February 2013, averaging 4.4% year-on-year in the first eight months of 2014 on the back of greater consumer confidence and brighter economic prospects. We expect the economic recovery to continue in the final quarter of 2014, and remain strong next year. Inflation should gradually converge towards the Bank of England target rate of 2%, while wage growth should slowly pick up in NOVEMBER 3,

13 tandem with further declines in the unemployment rate. These positive developments, as well as the expectations of gradual and limited interest rate rises, should support positive retail sales growth, in our view. Table 5 Macroeconomic Variables Indicators (%; year-on-year) Q2 2014f 2015f GDP growth rate Private consumption growth rate 1.0 (0.4) Unemployment rate (%) * Retail sales (%) (1.8) * N.A. N.A. Inflation rate (%) Wage growth rate (%) * Consumer confidence (21) (33) (29) (13) (1) N.A. N.A. *As of August As of September N.A. -- Not available. f--forecasts. Secondary shopping centers struggle while development pipeline remains modest. The total U.K. shopping center market consists of approximately 16.9 million sq. m. across 713 schemes. U.K. developers such as Intu, Hammerson, and Land Securities have historically dominated the domestic shopping center market, while Australian company Westfield has recently made some inroads. Intu owns the two largest shopping centers in the U.K.: The MetroCentre in Gateshead (189,400 sq. m. and which the Intu Metrocentre Finance PLC transaction financed in late 2013) and the Trafford Center in Manchester (182,700 sq. m., financed by the long-established Trafford Centre Finance Ltd. transaction, most recently tapped in early 2014). Shopping center developers tend to favor extensions and renovations over new developments, building out recreational areas such as restaurants, cafes, cinemas, and hotels to increase dwell time and the spending per shopping trip. This development choice has inevitably had a knock-on effect on the pipeline mix and size, which is well below prerecession levels (see below). The types of shop differ according to the shopping center size. While independent shops represent 49% of lessees of the whole U.K. shopping center universe, they account for less than 20% of the top 30 shopping centers that feature more chain stores. Pop-up shops, featuring three- to six-month leases have become more common in shopping centers with high vacancy rates, as they enable landlords to reduce void costs, and give them extra time to secure a long-term tenant or fine-tune the right tenant mix. Lease characteristics have been evolving in recent years. The traditional 10-year lease life with a five-year break clause still prevails, but monthly (instead of quarterly) rental payments are increasingly accepted. Turnover rents are reducing in attractiveness as they fail to capture click-and-collect sales. In addition, some retailers willing to access highly-sought after locations are foregoing any incentives and are ready to pay headline rents. Capital and growth. There is a clear divide between primary and secondary shopping centers when it comes to appeal to retailers, leasing NOVEMBER 3,

14 activity, capital, and rental growth. According to CB Richard Ellis, prime shopping center capital values rose 30% between June 2009 and March 2014, while secondary shopping centers fell by 23% (see chart 3). Chart 3 Yields reflect the divergence between the prime and secondary market in capital growths. While super-prime or prime yields were equal to between 4.25% and 5.25% as of Q2 2014, secondary shopping center yields were approximately 9.00%. Outlook. The scarcity of prime assets should keep prime yields under pressure but also induce higher-yielding investors to seek opportunities among secondary shopping centers. We expect to see falling vacancy rates in prime locations whereas secondary void rates are likely to only marginally improve. A gradual easing of financing conditions and a more diverse and competitive lending landscape may provide further impetus to shopping center development. Credit Evaluation In our analysis, we evaluated the underlying real estate collateral in the security group to generate an "expected-case" value. This value constitutes the "S&P Value" that we determine for each property (or portfolio of properties) securing NOVEMBER 3,

15 a loan (or multiple loans) in a securitization. It primarily results from a calculation that considers each property's net adjusted cash flows and an applicable capitalization (cap) rate. Given relatively stable performance of the portfolio's four initial assets, we did not adjust our assessed recovery value of billion for these assets. We conducted an analysis to determine an underlying value for the two additional assets, focusing on sustainable property cash flows and capitalization rates, on the assumption that a real estate workout would be required to repay noteholders if a borrower defaults. In this regard, we considered that the combined net income-producing potential of the Derby and Chapelfield assets was 32 million on a sustainable basis. When aggregated with our sustainable net cash flow of the current assets of 119 million, this would imply a post-issuance interest coverage of about 2.6x and a debt yield of 10%. This income figure includes our assumptions of relative security of much of the core income in the shopping centers through the transaction's life, with adjustments made to account for structural vacancies and ongoing arrears and costs relating to running the centers. In the next step of our analysis, we considered an appropriate cap rate for the estate at closing. We consider that the assets are reasonably well-located, well-managed, and well-maintained. As such, we believe they are likely to continue to attract high-quality tenants (whether investment-grade or national retailers) at rental levels that will likely support income strength. We also consider that income and geographic diversity should further support cash flow strength. Consequently, we consider 6.3% to be an appropriate blended cap rate for the portfolio. This is at the lower end of the cap rate range we adopt when assessing shopping centers in the U.K., and reflects our assessment of the portfolio's quality, including tenant diversity and overall lease profile. Our net recovery value was approximately 2.3 billion for the portfolio, representing a haircut (discount) of 27% to the Oct. 13, 2014 DTZ valuation. After we determined cash flows and values appropriate for the security group, we determined recovery proceeds at each rating level by applying an adjusted recovery proceeds rate at each rating category. Our analysis also assumed that interest payment disruptions may occur in scenarios of default and enforcement. Liquidity facility arrangements or a cash reserve would cover these interest payments, which would then be repaid from any ultimate recoveries. We compared the derived recovery proceeds at each rating level with the expected debt amount post-issuance. Our analysis indicated that, although overall transaction leverage would increase following issuance of the new series, the assessed leverage remained consistent with a 'A (sf)' rating, in our opinion. We noted that had the borrower elected to raise debt up to the 50% LTV threshold permitted by the covenant regime, the rating outcome would likely have been lower. NOVEMBER 3,

16 Scenario Analysis We performed a stress scenario analysis to determine, on an indicative basis, our ratings' sensitivity to a decline in the open market valuation. A market value decline may reduce refinancing prospects, or reduce recovery proceeds in the event of loan enforcement, in our view. To analyze the effect of a market value decline, we considered scenarios in which the market value of all of the properties in the security group decreases by 10% to 50% from the current reported market values. In such scenarios, which assume that the composition of the security group and the outstanding debt amount remains constant, we adjusted the "S&P recovery values", which we base our ratings analysis on, to account for then-depressed property values. Table 6 Indicative Ratings, Given The Assumed Decline In Market Value Preliminary Rating 10% 20% 30% 40% 50% Rated debt A (sf) A A BBB+ BB B- or below Key Performance Indicators We monitor the following performance indicators as part of our surveillance of this transaction, which may (although not exclusively) inform any future rating actions: Levels of tenancy retention within the current and future portfolio, Vacancy rates within the current and future portfolio, Rental levels within the current and future portfolio estate and performance of the portfolio, compared with competing offerings, Recovery rates attributable to the portfolio in a real estate workout, and Sponsor commitment to operate the transaction in a Tier 1 operating environment. Standard & Poor's 17g-7 Disclosure Report SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties, and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties, and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at Related Criteria And Research NOVEMBER 3,

17 Related Criteria Europe Asset Isolation And Special-Purpose Entity Criteria--Structured Finance, Sept. 13, 2013 Counterparty Risk Framework Methodology And Assumptions, June 25, 2013 European CMBS Methodology And Assumptions, Nov. 7, 2012 CMBS Global Property Evaluation Methodology, Sept. 5, 2012 Criteria Methodology Applied To Fees, Expenses, And Indemnifications, July 12, 2012 Methodology: Credit Stability Criteria, May 3, 2010 Understanding Standard & Poor's Rating Definitions, June 3, 2009 Weighing Country Risk In Our Criteria For Asset-Backed Securities, April 11, 2006 European CMBS Loan Level Guidelines, Sept. 1, 2004 Related Research Standard & Poor's Ratings Definitions, Sept. 22, 2014 Credit Conditions: Europe Decelerates (Again) Amid Rising Geopolitical Risks, Sept. 16, 2014 European Structured Finance Scenario And Sensitivity Analysis 2014: The Effects Of The Top Five Macroeconomic Factors, July 8, 2014 Global Structured Finance Scenario And Sensitivity Analysis: Understanding The Effects Of Macroeconomic Factors On Credit Quality, July 2, 2014 New Issue: Intu (SGS) Finance PLC, March 19, 2013 Application Of Property Evaluation Methodology In European CMBS Transactions, Nov. 7, 2012 European CMBS Monthly Bulletin Additional Contact: Structured Finance Europe; NOVEMBER 3,

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