Moody's Updates its Credit Tenant Lease Rating Methodology

Moody's Updates its Credit Tenant Lease Rating Methodology

Global Credit Research - 20 May 2015

New York, May 20, 2015 -- Moody's Investors Service has today republished Moody's Approach to Rating Credit Tenant Lease Financings. The revised primary credit rating methodology report contains an updated description on how we measure credit risk associated with tenants and introduces a section addressing the monitoring of these types of transactions. Additional minor editorial changes were made throughout the report.

This updated report replaces the one published November 2, 2011. The rating approach itself remains however unchanged.

In the report, we describe our approach to rating securities backed exclusively by the CTL obligations of a Moody's-rated entity. CTL transactions are a special category of commercial real estate finance, the credit analysis of which depends primarily on the property tenant's credit rating and the "bondable" quality of the net rent stream, rather than on a traditional real estate analysis of the collateral. The four key factors we analyze are the tenant credit quality, the lease obligation, the structure of the transaction, and the "dark" value (alternatively known as "vacant possession value") of the mortgaged property.

The republication will not result in any changes to outstanding ratings of Credit Tenant Lease transactions.

This press release is not intended to provide a summary of the methodology. For a full explanation of the methodology, please consult the updated report, now available on www.moodys.com and accessible via the link below.

LINK TO UPDATED METHODOLOGY REPORT:

http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF405118

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Dariusz Surmacz