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Moody’s places NRI’s B1 on review for possible upgrade
By k on August 7, 2009
Tokyo, August 07, 2009 — Moody’s Investors Service has placed on review
for possible upgrade its B1 issuer and senior unsecured long-term debt
ratings for Nippon Residential Investment Corporation (NRI).
This review follows the announcement on August 6, 2009 by Advance
Residence Investment Corporation (ADR) and NRI on their basic agreement
of an M&A.
Previously, Pacific Holdings, Inc, a sponsor of NRI, filed a petition
with the Tokyo District Court on March 10, 2009 to begin corporate
reorganization proceedings.
NRI believes that the presence of a sponsor company would be necessary
for building a stable financial base and growth strategy in the long
term. NRI is conducting its selection of a new sponsor with the support
of an external advisor.
Clear details on the schedule for the M&A have yet to be revealed, but
Moody’s believes the transaction will facilitate the NRI’s business
restructuring and therefore placed its ratings on review for possible
upgrade.
According to the announcement, ITOCHU Corporation (Baa1), a sponsor of
ADR, will continue to support the new REIT and thus multi-notch upgrades
may occur as its creditworthiness would — assuming the M&A proceeds –
exceed that of NRI.
In its review, Moody’s will focus on the progress of the M&A, the
refinancing of the relevant loans and the redemption of the bonds.
Moody’s previous rating action on NRI took place on February 5, 2009 when
it downgraded the issuer and unsecured senior debt ratings to B1 from Ba2
with a negative outlook. The rating action also takes into account the
fact that NRI’s rated bonds are subordinated to its outstanding
borrowings.
The methodology used in rating REITs was the “Rating Methodology for REITs
and Other Commercial Property Firms” (January 2006) which can be found
at www.moodys.com in the Credit Policy & Methodologies directory, in the
Ratings Methodologies subdirectory.
Nippon Residential Investment Corporation is a Japanese real estate
investment trust investing in and managing residential properties. Its
operating revenues totaled approximately JPY 9.1 billion for the fiscal
half-year ended May 2009.
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