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).

Regulatory and legal disclosures

Important information
The rating of investment funds expresses the opinion of Scope Analysis GmbH on the risk-return profile of the investment fund as a provider of capital for a project or asset. As far as the term “asset management company” is used, this applies to asset management companies, investment companies, management companies and investment advisory firms.

Scope Analysis GmbH is not a rating agency subject to Regulation (EG) Nr. 1060/2009 as amended by Regulations (EU) Nr. 513/2011, (EU) Nr. 462/2013 (together, ‘the rating agency regulations’) and is not registered as a rating agency subject to the rating agency regulations. The rating of investment funds is not a rating subject to the rating agency regulations and therefore cannot be used for regulatory purposes by credit institutions, investment firms, insurance companies, reinsurance companies, institutions for occupational pension provisions, management and investment companies, managers of alternative investment funds, and central counterparties.
Ratings prepared by Scope Analysis GmbH is not a recommendation to purchase or sell an investment fund and do not express an opinion over the value of investment funds.

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

Rating history
07.04.2017 | Initial rating | a-AIF

Information relating to publication date of previous ratings of the investment fund in the last 12 months:
The rating applies to a newly issued investment fund which was evaluated for the first time by Scope Analysis GmbH.

Information on interests and conflicts of interest
The rating was prepared independently by Scope Analysis GmbH however, for a fee as set out in the mandate of the issuer of the investment fund. HKA Hanseatische Kapitalverwaltung AG has paid for the right to reproduce and redistribute the preceding rating, rating summary and the Scope rating seal. When Scope Analysis GmbH issues an Asset Management Rating for an issuer of an investment fund, the corresponding result or ongoing updates can lead to an adjustment to the rating result of the aforementioned investment fund. The issuer paid for the right to use the analytical database of Scope Analysis GmbH in the following areas: Closed-end investment funds. The issuer has commissioned Scope Analysis GmbH for an Asset Management Rating for a fee.

Key rating sources
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
Scope Analysis GmbH ensured as far as possible that the information underlying the investment fund rating is of satisfactory quality and comes from reliable sources, but did not verify each item of information as specified in the sources independently.

Review by customer before publication of rating
Before publication, the customer was given the opportunity to review the rating and the main factors for the rating decision (rating drivers), including the underlying, summarised justifications for the rating of the investment fund (Rating rationale). The customer was finally given at least one full working day to indicate any factual errors or to appeal the rating decision and provide additional, important information for the rating. The rating report was adjusted on the basis of this review. The rating was not adjusted.

The methodology applicable for the rating closed-end investment funds is available on www.scopeanalysis.com.

Conditions of use/exclusion of liability
Scope Analysis GmbH prepares, with the necessary duty of care, its independent and objective rating on the risks and opportunities of the rated investment fund as of the date the rating is issued. Future events are therefore regarded as uncertain. Forecasts are based on estimates; hence, a rating does not represent a factual claim, but merely an opinion, which can also subsequently change and result in a rating adjustment. Scope Analysis GmbH is therefore not liable for damages resulting from decisions made from using the issued rating. The rating provided by Scope Analysis GmbH is not a recommendation to either purchase or sell an investment fund. The rating can only be seen by all involved parties as a factor in the investment decision and cannot replace the investor’s own analyses and assessment. The rating therefore only represents an opinion on the relevant risk-return profile of the relevant investment fund and does not under any circumstances provide a judgment on the risk-return profile of an investment and makes no indication as to whether involved parties will: make a profit, have invested capital returned or enter into specific risks of liabilities by investing in the investment fund. The rating is not an assessment of an investment fund’s creditworthiness and does not express an opinion on the value of the investment fund. 
Scope Analysis GmbH is of the assumption that in issuing a rating, the documents and information made available are complete and correct, and that the copies submitted were unaltered and completely reflect the content of the originals. Therefore Scope Analysis GmbH does not give any guarantee for the accuracy and completeness of information used.
In case of ordinary or simple negligence on the part of a statutory representative or agent, the liability of Scope Analysis GmbH with respect to any breach of significant contractual duties, particularly main contractual duties, is limited to typically foreseeable damages. Liabilities for ordinary or simple negligence are otherwise excluded. All claims for damages – excepting those owing to intent or gross negligence – expire after two years. Expiration begins at the end of the year in which the claim originated. The aforementioned limitation of liability and condition of expiration do not apply to liabilities in relation to damages resulting from personal injury or loss of life.
The rating is protected by copyright. Commercial use is not permitted without the written consent of Scope Analysis GmbH. Without the previously mentioned and explicit written consent of Scope Analysis GmbH, ratings may not be copied or reproduced, saved or redistributed in any way, either in whole or in part. Citations from ratings must be appropriately sourced. All additional forms of use require the prior written consent of Scope Analysis GmbH. It is also not permitted to publish ratings without the knowledge of Scope Analysis GmbH. The right to publication is entirely contingent upon contractual consent for redistribution rights from Scope Analysis GmbH.

Scope Analysis GmbH,
Lennéstraße 5,
10785 Berlin
Fax +49(0)30 27891-100
Telephone +49 (0)30 27891-0
VAT identification number DE 814638226  


Scope Analysis GmbH    Phone: +49 (0)30 27891-0
Frank Netscher    f.netscher@scopeanalysis.com
Sonja Knorr    s.knorr@scopeanalysis.com
André Fischer    an.fischer@scopeanalysis.com