Moody's assigns provisional ratings to CMBS notes of UAE CMBS Vehicle No. 1 Limited

They are the following:(P) Aa3 to the USD 28,100,000 Class A Secured Floating Rate Notes due 2016, (P) A3 to the USD 12,900,000 Class B Secured Floating Rate Notes due 2016, (P) Baa1 to the USD 12,500,000 Class C Secured Floating Rate Notes due 2016, (P)Baa3 to the USD 13,500,000 Class D Secured Floating Rate Notes due 2016.

The ratings on the Notes are based upon: (i) Moody's assessment of the real estate quality; (ii) characteristics of the underlying loan, in particular its loan to value and interest service coverage as well as the availability of cash sweep amounts subject to a breach of certain ICR levels; (iii) the availability of a liquidity facility to be provided by HSBC Bank Middle East Limited, (Aa2, P-1); (iv) hedging to be provided by HSBC Bank Middle East Limited, (Aa2, P-1); (iv) the availability of minimum annual rental guarantee of AED 27,000,000 from Tecom Investment FZ-LLC, a wholly-owned subsidiary of A1 rated Dubai Holding(v) fully sequential pay-down structure; and (vi) the legal and structural features of the issue.

This transaction represents the securitisation of a single commercial real estate loan arranged by HSBC Bank Middle East and HSBC Bank plc. This is the first CMBS transaction involving properties in Dubai. The loan is secured by, inter alia, a mortgage on a single office property located in Dubai within the Technology and Media Free Zone ("TECOM Free Zone"). The property is a newly constructed multi-tenanted (76 tenants) office building.

The key strengths of the pool are (i) the high current occupancy of the property (almost 100%) coupled with a historically high occupancy rate within the TECOM Free Zone, (ii) the tenant diversity in terms of number of tenants combined with below market rents (the rents are on average about 40% below the current marked rental level for comparable office properties located outside the TECOM Free Zone); and (iii) the good credit characteristics of the underlining loan (Moody's average ICR of 1.34x. and Moody's LTV ratio of 72,5%); and (iv) the fully sequential payment allocation. The main weaknesses are (i) the linkage to the viability of the TECOM Free Zone concept and the inherent tenant sector concentration; (ii) reliance on TECOM Investment FZ-LLC with respect to the letting process and property management; (iii) some remaining legal uncertainties imbedded in the structure, in particular with respect to the validity and enforceability of the implemented security structure.

Moody's issues provisional ratings in advance of the final sale of securities and the ratings reflect Moody's preliminary credit opinion regarding the transaction. Upon a conclusive review of the final versions of all the documents and legal opinions, Moody's will endeavour to assign definitive ratings to the transaction. A definitive rating may differ from a provisional rating.

The ratings address the expected loss posed to investors by the legal final maturity. In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal at par on or before the rated final legal maturity date. Moody's ratings address only the credit risks associated with the transaction; other non-credit risks have not been addressed, but may have significant effect on yield to investors.