S&P: Prelim AAA Rtg to Macquarie Office Trust CMBS.

Business Editors

MELBOURNE--(BUSINESS WIRE)--Standard & Poor's

July 5, 2000--Standard & Poor's today assigned its triple-'A' preliminary rating to Macquarie Office Trust's (MOT) A$224 million commercial mortgage-backed notes.

The three-year, fixed-rate bonds are backed by 16 investment-grade office buildings (out of the trust's total holding of 18 buildings), located across mainland Australia.

The preliminary rating is based on information as of June 30, 2000. Subsequent information may result in the assignment of a final rating that differ from the preliminary rating.

The preliminary rating on the notes to be issued by Macquarie Office Management Ltd. (MOML), in its capacity as the responsible entity of MOT, reflect the ability of MOML to pay interest semiannually, and the principal by the legal final maturity date. This assessment takes account of the quality of the collateral, cash flow coverage and debt levels, the legal integrity of the structure, liquidity support, and insurance coverage.

This transaction is characterized by MOT retaining a direct ownership interest in the collateral properties, with bondholders benefiting from the strong security structure.

According to Ashley Reed of Standard & Poor's property securitization group, the transaction is the first time an Australian-listed property trust has accessed the debt capital markets utilizing commercial mortgage-backed securities (CMBS).

"From the outset of this transaction, Macquarie identified a need for flexibility and all parties have been focused on achieving this outcome." Mr. Reed emphasized that the transaction incorporates a number of progressive features including the ability to issue secured bonds directly out of the trust, an ability to sell and acquire property, and the flexibility to drawdown further funding in the form of subordinated bank debt or additional rated notes, provided rating affirmation is obtained.

"The Macquarie transaction demonstrates the increasing maturity of property debt securitization in Australia. In the past 18 months, global CMBS have become increasingly active and it is particularly encouraging to see that Australian CMBS continues to share in this growth." Mr. Reed noted that in the past six months Standard & Poor's had received strong interest in CMBS ratings from property owners, particularly listed property trusts (LPT). "It is evident that LPTs are increasingly focused in managing their debt exposure, and securitization offers them a vehicle to achieve funding diversity and cost savings relative to traditional financing sources," he added.

"The Macquarie transaction follows Standard & Poor's rating of three other CMBS deals late last year, including the Leda transaction backed by two major retail shopping centers, and the first Australian CMBS transaction involving the ground lease of the Sydney Inter-Continental Hotel." Mr. Reed said: "These transactions form a strong platform for the continued expansion of Australian property securitization." --CreditWire.