Frankfurt, December 21, 2009 -- The composite score for the European industrial property markets that support commercial mortgage-backed  securities (CMBS) declined in H1 2009, says Moody's Investors Service in its latest analysis of the sector. Besides the negative impact of the change in data set, a key factor for the weakening score is the high increase in vacancies following a continued weakening of occupier demand across all eight European industrial markets analysed.

In the report, which is the 12th semi-annual update of Moody'sRed-Yellow-Green® analysis of the European industrial property markets, Moody's notes that between mid-year 2008 and mid-year 2009, the weighted-average composite score for the European industrial markets covered by the analysis decreased to 47 compared with approximately 55 like-for-like a year ago, which indicates a yellow market. As the previously reported score as of mid-year 2008 was 70, Moody's cautions that some of the changes in the respective market scores are due to the change in data set, as the data provider had to be changed for this report. This means that the definition of the sub-markets is different to the previously used data. Four out of the eight markets analysed were reclassified downwards. Only one market remained green, while two markets are now red.

"All of the scores have deteriorated compared to the results 12 months ago," says Jeroen Heijdeman, a Moody's Analyst and co-author of the report. "The largest declines have been recorded in the Barcelona and the Paris Ile-de-France markets, which were mainly driven by an increase in vacancies over the past 12 months. The Manchester market score decreased slightly (-6) but remained a green market."The rating agency further notes that as the downturn in the European financial and property markets continued, the previously stable scores of the industrial occupational markets weakened. "The previously reported flexibility of the industrial markets (e.g. due to the relatively short development time to completion and higher degree of pre-letting prior to development) has been stretched while market turmoil continued and key ratios, such as demand-supply and vacancy levels, have deteriorated," says Oliver Moldenhauer, a Moody's Assistant Vice President and co-author of the report. "Continued reduced levels of demand and high levels of supply could lead to even higher vacancy levels affecting scores negatively in the future."

The Red-Yellow-Green® report assesses the strength of European industrial real estate markets that support CMBS. The reports are based on actual data and 12-month forecasts of market supply-and-demand movements. Depending on the degree of stress on rental markets in the short term, markets are scored on a scale of zero (weak) to 100 (strong). Scores of 0-33 are identified as red, 34-66 as yellow, and 67-100 as green. The analysis covers eight major European industrial regions including Birmingham, London, Leeds/Yorkshire, Manchester, Barcelona, Brussels, Paris Ile-de-France and Rotterdam.

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For more information, please contact:
London
Daniel Kolter
Managing Director
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Frankfurt
Oliver Moldenhauer
Asst Vice President - Analyst
Structured Finance Group
Moody's Deutschland GmbH
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

© Press Release 2009