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November 2011
EXECUTIVE SUMMARY
Important Notice
It is the purpose of this document to provide the latest Overview of the products & services provided by Al Bashayer Investment Company LLC (BASHAYER) These product & services shown may change in the future and BASHAYER reserves the rights to change these without notice This document may be deemed as a preliminary offer to parties who are interested in participating, engaging, investing in the products & services shown. This document is submitted to you on a confidential basis. By accepting this document the recipient agrees that neither it nor any of its employees or advisers shall use the information for any purpose other than for evaluating its interest in the Company or divulge such information to any other party. This document shall not be photocopied, reproduced or distributed to others without prior written consent of BASHAYER.
Some statements contained herein that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which the Company operates, managements beliefs and assumptions made by the management. Words such as expects, anticipates, should, intends, plans, believes, seeks, estimates, projects, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Prospective recipients of this document should not treat the contents of this document as advice relating to legal, taxation, financial, investment of any other matters. The recipients of this document should inform themselves as to: (a) legal requirements within their own countries; (b) any foreign exchange restrictions which they might encounter; and (c) the income and other tax consequences which may apply in their own countries relevant to the project. Recipients of this document must rely upon their own representatives, including their own legal advisers and accountants, as to legal, tax, investment, financial and related matters concerning the project. All information is correct at the time of printing and subject to change without notice By accepting this document, the recipient hereof agrees to be bound by the foregoing.
Obligor(s)
PACKAGING
i)
ii) iii)
The assets / receivables cash flows (Contractual, Retail, Valuation Driven, Event Driven)
The performance to achieve the receivable cash flows (by the Issuer / Sponsor / Operator / Servicer) The strengths of the receivables source i.e. Obligors.
CONFIDENTIAL & PROPRIETARY
DISTRIBUTION
Investors
1
i)
The level of tranches and the actual amount of each tranch, depends on the interplay between the : The amount of collateral available & the amount to be raised (LTV)
ii)
iii)
The cash flow strength of the properties portfolio to cover the debt repayment (DSCR).
The blended costs of funding (based on rating achieved through the tranching).
Equity Note holder : usually this will be the property owner / client itself.
Moodys Rating
LTV Constraints (%) DSCR Constraints (Abu Dhabi)
A2 56% 1.88
The rating process will look into the real estate asset (on a standalone basis) first and subsequently on a portfolio basis.
The areas that will be looked upon and scrutinised by the rating agency are as shown below Credit Risk Drivers for RE income Producing Template
Market Projection and Revenue Contract Competitive Market Position Market Risk Exposure Financial Strength Technology, Construction & Operations Legal & Finance Structure
SQ Rating
SQ1
Step 2
SQ2
SQ3
SQ4
Step 3
Servicer rated SQ4 exhibit elements of weakness in servicing ability and financial and operational stability.
Servicer rated SQ5 exhibit weak servicing ability and poor financial and operational stability
SQ5
Step 4
SQ Ratings measure the quality of the servicing operations rather than the probability of default of the servicer.
While a servicers financial stability will be taken into account in the SQ analysis, it will be used mainly to determine the potential deterioration in servicing quality, e.g., the potential effect it may have on staff motivation, future recruitment and training, management focus. The SQ score would be affected to the extent that such financial condition is perceived as having a likely negative affect on the servicing operations.
Step 5
Step 6
Step 7
Use of SQ Rating -Moodys will use the SQ Rating in its analysis of all ABS deals whose underlying receivables are serviced by the rated servicer
Monitoring -SQ Rating will be monitored on an on-going basis
Step 8
Class A
Rating Aaa
Investor Public
Balance 350
%age 100%
CCY USD
Spread L+20
Maturity matured
Class A B C D
UAE CMBS No.1 Limited / Arabian Real Estate Investment Trust 27 July 2007, UAE
This is the first publicly rated conventional securitisation of a single commercial real estate loan secured by a single, multi tenanted property in Dubai within the Technology and Media Free Zone. The new funding was used to refinance a bridge loan which was initially used to acquire the property. The security package for investors was promarily a first ranking mortgage over the property, and assignment by way of security of all shares in the SPV, its rights, title and interests in the management and leasing agreement, and various other contractual rights Class A B C D Rating Aa3 A3 Baa1 Baa3 Investor Public Public Public Public Balance 28.1 12.9 12.5 13.5 %age 41.9% 19.3% 18.7% 20.1% CCY USD USD USD USD Spread L+50 L+70 L+140 L+170 Maturity Jun 2016 Jun 2016 Jun 2016 Jun 2016
Sun Finance Limited / Sorouh Real Estate PJSC 11 Sept 2008, UAE
This first Abu Dhabi transaction is an innovative example of an asset backed sukuk financing. Sorouh securitised AED5.7 bil of payments due to it under the land purchase contracts of 109 sub-developers working on the estate. A sizable portion (approx AED 1.7 bil) was put into escrow to fund the construction costs and helped further delink the sukuk performance from that of Sorouh. The credit risk of the transaction is related (among other things) to the credit worthiness of the sub-developer pool, involvement of the Abu Dhabi Urban Planning Council and low (effective) LTVs of the contracts were key deal features. Certificates are amortising with full pass through of asset cashflows. Class A B C Subn Rating Aa3 A3 Baa3 NR Investor Public Public Public
Originator
Borrower (onshore)
PMLA payments Title
CMBS investors
Properties
PMLA payments
Lessees (Obligors)
CONFIDENTIAL & PROPRIETARY
The Borrower will grant a first ranking mortgage under United Arab Emirates law (UAE Law) over the Property in favour of the Onshore Bank (the Borrower Security Agent) pursuant to a mortgage (the Borrower Mortgage) registered at the respective emirates Lands Department as security for, inter alia, repayment of the Term Loans.
The Borrower will also assign by way of security under UAE Law, to the Borrower Security Agent, all the Borrower's right, title and interest in the Insurance Policies on the properties. The Borrower will grant a first ranking fixed charge under English law over its interest in the Borrower Transaction Account and will assign by way of first fixed security under English law its rights under those of the Transaction Documents governed by English law to which it is a party. On the Issue Date, the Borrower will enter into an asset management agreement with an Asset / Property Manager (the Asset Management Agreement) pursuant to which the Borrower will appoint the Asset Manager to undertake certain property management and reporting functions. The Issuer will use, inter alia, amounts received by it in its capacity as lender under the Issuer/Borrower Facility Agreement, in making payments to, among others, the holders of the Notes (the Noteholders).
CONFIDENTIAL & PROPRIETARY
Indicative Terms
Items
Description Denomination Currency LTV (Cash) Credit Rating Coupon Tenor Principal Redemption
Explanation
A debt instrument based on Ijarah principle (Leasing) USD 48% - 65% (depending on rating) Required Fixed rate Up to 10 years i) ii) Redemption Value is Fixed upfront Client must choose upfront for either Lump-sum redemption at maturity or fixed periodic redemption.
One-time early full-redemption option at Year 5 Depending on amount of individual tranche : 2.00% for AA rating (0.2% p.a.), 2.50% for A rating (0.25% p.a.), 3.00% for BBB rating (0.30% p.a.), 3.50% for BB rating (0.35% p.a.) 0.50% p.a. 3.80% p.a. to 5.65% p.a. (depending on credit rating) 4.50% to 6.50% (fixed rate, depending on credit rating) Smaller (multiple tranches with multiple credit ratings) i) ii) Maximum LTV (from 65% for BB rating to 48% for AA rating) Minimum DSCR (from 1.46x for BB rating to 2.21x for AA rating)
Swap Costs Current Market Yield All-in funding costs Size Covenants Issuer base
CONFIDENTIAL & PROPRIETARY
Debt investors
10
i) ii)
Bashayers will be the Financial Advisor to the Client, Bashayers role will be to advise on all matters relating to, and throughout the CMBS issuance processes. Bashayers responsibilities are :
Prepare an Initial Pitch which includes an overview of the funding requirements and profile of the Client Prepare a Preliminary Private Information Memorandum , which includes the funding objectives, structuring the financing structures, Issuer profile, financials and indicative terms & conditions. The aim of this document is to effectively sell the Clients Credit Story to the local lead manager & rating agencies. Source, arrange and/or negotiate for and on behalf of the Client in securing a Lead Manager who will act as the arranger & submission agent for the CMBS issuance. Advise and/or Negotiate for and on behalf of the Client, on the appointment of all other 3rd parties recommended by the Lead Manager, these parties are :
iii) iv)
a)
b) c) d)
Rating Agencies
Legal Counsel & Reporting Accountant Shariah Advisor Any other parties relevant to the CMBS issuance
v)
vi)
Identify, Source and Arrange for participations from financial institutions & investors during the placement and issuance stage of the CMBS. This is done independently or together with the Lead Manager.
Deliver an opinion to any Related Board of Directors, if requested by the Client, as to the fairness from a financial point of view on any or all parts of the CMBS issuance.
11
10
11
12
13
14
15
16
Phase 3
Phase 2
Phase 1
12
Costs (est)
$400,000.00
$50,000.00 $200,000.00 $50,000.00 $35,000.00 $50,000.00 $60,000.00 $20,000.00 $25,000.00 $890,000.00
Costs (est)
$150,000 $10,000
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CONTACT INFORMATION
Contact Information
AL BASHAYER INVESTMENT COMPANY LLC
PO BOX 31665 ABU DHABI, UNITED ARAB EMIRATES T : +971 2 4418800
www.bashayer.com
F : +971 2 4418844
Al Bashayer Investment Company LLC (Bashayer) , is an investment company based in Abu Dhabi, and licensed by the Central Bank of the UAE. It was established in 2008 with a paid-up capital of AED 50 million. Bashayer is owned by prominent shareholders including members of the Al Jaber family, Addax Investment Bank (Bahrain) and Waha Capital (Abu Dhabi). Under its current license, Bashayer can provide fund management, investment services & financial advisory to its clients. Other related activities that can be undertaken by Bashayer includes carrying the business of a fund manager, creating trusts, appointment of trustees, investment managers, custodian, brokers and agent. It also carries the business of holding of investments in securities, stocks, shares, loans, deposits & sukuks .
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