Regulatory Alerts2025-10-31
Added · Updated
REIT Fund Rating Scale
PACRA establishes a standardized REIT Fund Rating Scale to evaluate the likelihood of successful project implementation and asset risk factors for Development or Hybrid REIT funds. The framework assigns ratings from RFR1 (Exceptionally Strong) to RFR5 (Weak quality), supplemented by outlook indicators, rating watches, and specific actions for suspension or withdrawal. Ongoing surveillance requires comprehensive reviews at least every six months, with interim assessments triggered by material events to maintain rating accuracy.
REIT Fund Rating Scale
| REIT Fund Rating (RFR) |
|---|
| An independent opinion on a Development or Hybrid REIT fund's likelihood of successful implementation of REIT projects and risk factors impacting value of REIT assets. |
| Scale | Long-Term Rating |
|---|---|
| RFR1 | Exceptionally Strong likelihood of successful implementation of REIT project. Risk factors impacting value of REIT assets are negligible over the foreseeable future. |
| RFR2++ RFR2+ RFR2 | Very Strong likelihood of successful implementation of REIT project. Risk factors impacting the value of REIT assets are modest over the foreseeable future. |
| RFR3++ RFR3+ RFR3 | Strong likelihood of successful implementation of REIT project. Risk factors impacting value of REIT assets may vary with possible changes in the economy over the foreseeable future. |
| RFR4++ RFR4+ RFR4 | Adequate likelihood of successful implementation of REIT project. Risk factors impacting value of REIT assets are sensitive to changes in the economy over the foreseeable future. |
| RFR5 | Weak quality likelihood of successful implementation of REIT project. Risk factors impacting value of REIT assets are capable of fluctuating widely if changes occur in the economy. |
| Rating Modifiers | Rating Actions |
|---|---|
| Outlook (Stable, Positive, Negative, Developing)<br>Indicates the potential and direction of a rating over the intermediate term in response to trends in economic and/or fundamental business / financial conditions. It is not necessarily a precursor to a rating change. ‘Stable’ outlook means a rating is not likely to change. ‘Positive’ means it may be raised. ‘Negative’ means it may be lowered. Where the trends have conflicting elements, the outlook may be described as ‘Developing’. | Rating Watch<br>Alerts to the possibility of a rating change subsequent to, or, in anticipation of some material identifiable event with indeterminable rating implications. But it does not mean that a rating change is inevitable. A watch should be resolved within foreseeable future, but may continue if underlying circumstances are not settled. Rating watch may accompany rating outlook of the respective opinion. |
Surveillance. Surveillance on a publicly disseminated rating opinion is carried out on an ongoing basis till it is formally suspended or withdrawn. A comprehensive surveillance of rating opinion is carried out at least once every six months. However, a rating opinion may be reviewed in the intervening period if it is necessitated by any material happening. Rating actions may include "maintain", "upgrade", or "downgrade".
Disclaimer: PACRA has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. PACRA shall owe no liability whatsoever to any loss or damage caused by or resulting from any error in such information. Contents of PACRA documents may be used, with due care and in the right context, with credit to PACRA. Our reports and ratings constitute opinions, not recommendations to buy or to sell.