Press Release: Moody's Investors Service
April 3, 2002
NEW YORK, NY -- Moody's Investors Service has announced the global launch of a new rating system for private and
public real estate funds.
This new system, called Moody's Real Estate Fund Ratings, is designed for commingled open-ended and closed-ended
funds, unit trusts, partnerships, joint ventures and similar funds that invest in real property and/or mortgages
on real property. The product is designed to boost transparency and to allow for increased investor confidence
in the industry.
``We are pleased to provide this new rating system to the global real estate community,'' says John J. Kriz, managing
director of real estate finance at Moody's. ``The market's excellent reception has clearly delivered the message
that Moody's Real Estate Fund Ratings will be important to fulfilling the needs of investors, consultants and investment
managers for an independent, transparent and respected rating system for property funds' asset quality and management
quality.''
The ratings will also assist investors and consultants in meeting their fiduciary responsibilities.
Moody's is the first rating agency to provide ratings to real estate funds, following its assignment of ratings
to seven German property funds this March. Moody's uses its well-developed interdisciplinary analytical framework
in determining Real Estate Fund Quality Ratings.
``Moody's unique combination of global expertise in evaluating fund managers, and knowledge of international real
estate markets, provide the skills crucial to derive meaningful opinions for real estate fund investors, pension
fund consultants and fund managers,'' says Arlene Isaacs-Lowe, senior vice president of real estate finance at
Moody's. ``Moody's international brand recognition and reputation will enhance the comparability and transparency
of these investment structures across global markets.''
Moody's was recently appointed the exclusive rating agency for the evaluation of German open-ended real estate
funds. This prestigious appointment was made jointly by the Association of German Investment and Asset Management
Companies (BVI Bundesverband Deutscher Investment- und Vermogensverwaltungs-Gesellschaften e.V.) and the German
open-ended real estate fund managers, based on their view that the assignment of Moody's ratings for these funds
will provide additional, crucial transparency for the investment community.
The German open-ended real estate fund market exceeded EUR55 billion in 2001, as investors have favored German
funds as a safe haven from volatile equity markets. The focus on property funds is currently at an all-time high
as a result of turbulent equity market conditions worldwide.
``We are honoured that our Real Estate Fund ratings have been chosen by the German fund community,'' says David
Vriesenga, Moody's European-based representative director in the rating agency's mutual fund group.
Moody's Real Estate Fund Rating is comprised of two components - Management Quality and Portfolio Investment Quality.
The Management Quality Rating assesses the overall quality of the organization, management abilities, capacity
of the firm's infrastructure, operational procedures, risk management and controls, financial wherewithal, and
quality of client servicing.
The Investment Quality Rating assesses the impact of macro- and micro-economic trends on real estate fundamentals,
asset quality, portfolio quality, fund liquidity and performance.
Unlike traditional ratings, Moody's Real Estate Fund ratings do not address a fund's ability to repay a fixed obligation,
or to satisfy contractual financial obligations.
Moody's Real Estate Fund Rating definitions are as follows:
Management Quality Component
AaaMQ Real Estate Funds rated AaaMQ are judged to be managed in an exceptional manner. This rating indicates an exceptionally strong management and control environment. AaMQ Real Estate Funds rated AaMQ are judged to be managed in an excellent manner. This rating indicates an excellent management and control environment. AMQ Real Estate Funds rated AMQ are judged to be managed in a good manner. This rating indicates a good management and control environment. BaaMQ Real Estate Funds rated BaaMQ are judged to be managed in an adequate manner. This rating indicates an adequate management and control environment. BaMQ Real Estate Funds rated BaMQ are judged to be managed in a questionable manner. This rating indicates a questionable management and control environment. BMQ Real Estate Funds rated BMQ are judged to be managed in a poor manner. This rating indicates a poor management and control environment.
AaMQ through BMQ may be modified by a ``1'', ``2'' or ``3'' to indicate positioning within each rating category.
Portfolio Investment Quality Component
AaaIQ Real Estate Portfolios rated AaaIQ are judged to have exceptional investment quality. AaIQ Real Estate Portfolios rated AaIQ are judged to have excellent investment quality. AIQ Real Estate Portfolios rated AIQ are judged to have good investment quality. BaaIQ Real Estate Portfolios rated BaaIQ are judged to have adequate investment quality. BaIQ Real Estate Portfolios rated BaIQ are judged to have questionable quality. BIQ Real Estate Portfolios rated BIQ are judged to have poor quality.
AaIQ through BIQ may be modified by a ``1'', ``2'' or ``3'' to indicate positioning within each rating category.
For additional information, we encourage you to call John J. Kriz (+1 212/553-7134) or Arlene Isaacs-Lowe (+1 212/553-7841)
in New York City, or David Vriesenga (+44-207-772-5403) in London.
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Contact:
Moody's Investors Service
John J. Kriz, 212/553-7134
Arlene Isaacs-Lowe, 212/553-7841 in New York City
or
David Vriesenga, +44-207-772-5403 in London