07. Apr 2017 Rating news – Closed-end Funds
Scope assigns closed-end alternative investment fund IMMAC Austria XVI a rating of a-AIF
Nursing home near Graz with letting agreement that runs beyond the fund’s planned maturity. The issuer is the market leader in closed-end funds specialising in care facilities.
IMMAC Austria XVI is a retail alternative investment fund (AIF) that holds a nursing home in Kalsdorf, near Graz in Austria. The property has a long-term, unlimited letting agreement with SZK Amicalis GmbH. The tenant has also waived its ordinary right to termination over 25 years. This means that the nursing home will be let until 31 August 2041 – well beyond the planned life of the fund.
The nursing home was opened in 2004 with an original capacity of 80 beds. Afterwards the building was expanded and additions made over three subsequent construction phases until 2006. As of the date of the prospectus, the building has 160 beds in 80 double rooms, of which only 88 beds are currently occupied. The financial development of the tenant, and the AIF’s as a result, essentially depends on the constant increase of the property’s utilisation.
The property’s purchase price is EUR 11.1m. The total financing volume is EUR 15.0m, of which 41.6% is composed of senior debt yet to be serviced (EUR 6.2m). On top of a 5% agio, initial costs comprise 20.3% of issued capital.
Scope expects a return of 4.17% p.a. with a downside volatility of 3.04%. According to Scope’s estimates, the risk-return ratio is expected to generate a good risk-adjusted return.
The rating is positively influenced by:
- The letting agreement that runs beyond the fund’s planned maturity
- Debt with fixed terms over 10 years and a relatively high amortisation rate
- The completed transfer of ownership
- The very good Asset Management Rating of HKA Hanseatische Kapitalverwaltung AG
Scope has identified the following risk drivers:
- The property is only equipped with double rooms, and occupancy is very low (88 of the 160 beds)
- The default probability of the tenant
- Refinancing risk after 10 years
- The limited re-purposing potential of care facilities
- The relatively high rate of initial costs in relation to peers (retail AIF)
Scope’s analysis yielded the following figures for the AIF:
- Break-even probability: 93.88%
- Probability of losses: 6.12%
- Value at risk 28.58% (a loss of 28.58% is not exceeded in 99% of all simulations)
- Risk class: 5
The issuer is the market leader in closed-end funds specialising in care facilities, and has an Asset Management Rating from Scope of AAAMR (as of 8 November 2016).
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The party responsible for the dissemination of the above rating is Scope Analysis GmbH, Berlin, District Court for Berlin (Charlottenburg) HRB 97933 B with its office in Lennéstraße 5, 10785 Berlin, and an executive board composed of Florian Schoeller, Torsten Hinrichs and Dr Sven Janssen. Rating was prepared by Frank Netscher, Senior Analyst, Lead Analyst. Responsible for approving the preparation of rating: Sonja Knorr, Executive Director, Committee Chair
07.04.2017 | Initial rating | a-AIF
Information relating to publication date of previous ratings of the investment fund in the last 12 months:
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Prospectus - Website of issuer - Investment information sheet - Detailed information provided on request - Data provided by external providers - External appraisals - Interview with asset management company - Press reports / other public information
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