Servicios Corporativos Javer, S.A.P.I. de CV -- Moody's places Javer's unsecured debt rating under review direction uncertain

New York, December 03, 2012 -- Moody's Investors Service placed the senior unsecured debt rating of Servicios Corporativos Javer, S.A.P.I. de C.V. ("Javer") under review direction uncertain.

RATINGS RATIONALE

This rating action is a result of Javer's announcement that it has signed a definitive agreement to acquire most of the low-income housing developments of ViveICA, S.A. de C.V. ("ViveICA") from Empresas ICA S.A.B. de C.V. via an equity distribution and the assumption of $600 million Mx pesos of debt. Post acquisition, Javer would become the third largest homebuilder in the country and, more importantly, will gain more geographic diversification by increasing its presence in Central and Southern Mexico and reducing its reliance in Nuevo Leon, a market that has struggled in the past two years. In addition, this transaction provides market segment diversification, as the ViveICA portfolio is mostly low-income housing units with mortgage financing from INFONAVIT and FOVISSSTE.

However, on standalone basis Javer continues to struggle with meeting its sales volume and EBITDA targets, which has placed negative pressure on margins. The company has faced several challenges over the past two years with slower sales volumes, much of which can be attributed to the company's concentrated geographic exposure to North Eastern Mexico. Certain cities within this region have faced drug-related violence which has negatively affected employment due to an exodus of companies to safer areas in Mexico, thus translating to slower homes sales pace. In addition, the North East has not benefited much from subsidy allocation as has other areas of the country, placing further strain on sales. However, should the transaction with ViveICA close Javer will have 46 developments in 11 states nationwide, 20 of them from ViveICA. Furthermore, post acquisition the company's leverage metrics and interest coverage would remain flat to slightly positive.

In its review Moody's will continue to monitor the progress and consummation of the proposed ViveICA acquisition, as well as the final capital structure and the resulting corporate and legal structure. Moody's expects to conclude its analysis in late 1Q13 after the expected closing of the transaction.

Moody's stated that should the transaction close as expected it will most likely confirm Javer's rating with a stable outlook. Upward rating movement is unlikely in the intermediate term until the entity has successfully completed the integration of the portfolio and established a new track record. Should the transaction not close, Javer's rating will be negatively pressured as the company's operating metrics, particularly debt/EBITDA and fixed charge coverage continue to deteriorate as a result of weaker than expected earnings. The company continues to be challenged in meeting its earnings and sales volume guidance for 2012 as a result of fewer than anticipated subsidies for vertical housing in its target markets. Moody's anticipates that a downward rating action will range from a change in outlook to negative to a one notch downgrade.

The following rating was placed under review direction uncertain:

Servicios Corporativos Javer, S.A.P.I. de C.V. -- Senior Unsecured Debt Rating at B1

The last rating action with respect to Javer was on November 30, 2011 when Moody's downgraded the senior unsecured debt rating of Javer to B1, from Ba3. The rating outlook was revised to stable from negative.

The principal methodology used in this rating was Moody's Rating Methodology for the Global Homebuilding Industry published in March 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Servicios Corporativos Javer, S.A.P.I. de C.V., headquartered in Monterrey, Mexico is one of the largest privately-owned, fully integrated homebuilders engaged in the development, construction, marketing and sale of affordable housing in Mexico. The firm reported assets of approximately $6,734 million Mx pesos and equity of approximately $1,470 million Mx pesos at September 30, 2012.

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Griselda Bisono Analyst Commercial Real Estate Finance Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Nick Levidy MD - Structured Finance Commercial Real Estate Finance JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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