The CRE loan and CMBS Rating Methodology supplements the General Structured Finance Rating Methodology and should be read together with the Counterparty Risk Methodology.

The methodology applies to both the initial ratings and the monitoring of CRE instruments, primarily of income-generating CRE, and non-granular CMBS. CRE instruments exposed to assets under construction and refurbishment, which imply business risks beyond the cash flow projected for existing or future lease contracts, will be assessed on a case-by-case basis.

Scope expects up to two transactions to be positively impacted by the changes.

As per its policies, Scope will place under review the transactions impacted by the new methodology as soon as practically possible. The reviews and changes to the affected ratings will be completed within six months.

The final methodology can be downloaded here or on www.scoperatings.com.

Summary of the proposed key changes

This proposed update includes the following adjustments:

1. A clarification of how we incorporate sponsor and business plan analysis into the rating process
    
2. Aligns our liquidity coverage expectations with the General Structured Finance Rating Methodology
    
3. Updates to our rating conditional rental value haircuts and discount rates approaches
    
4. A clarification of our vacancy assumptions
    
5. A clarification of our foreclosure assumptions for CMBS
    
6. A clarification of how we capture ESG risks in our ratings
    
7. Amendments to our CRE loan and CMBS data guidelines
    
8. Editorial changes

No comments have been submitted during the request-for-comments period, which ended on 3 December 2024.