DBRS Finalizes Ratings of Resource Capital Corp. CRE Notes 2013, Ltd.

DBRS has today finalized the provisional ratings and added a new rating to the Floating Rate Notes (the Notes) issued by Resource Capital Corp. CRE Notes 2013, Ltd. The trends are Stable.

-- Class A at AAA (sf)
-- Class A-S at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (low) (sf)
-- Class D at BBB (low) (sf)
-- Class E at BB (sf)
-- Class F at B (sf)

Classes D, E and F are non-offered classes.

With respect to the deferred interest notes (Classes C, D, E and F), to the extent interest proceeds are not sufficient on a given payment date to pay accrued interest, interest will not be due and payable on payment date and will rather be deferred. The ratings assigned by DBRS contemplate timely payments of distributable interest and, in the case of deferred interest notes, ultimate recovery of deferred interest (inclusive of interest payable thereon at the applicable rate, to the extent permitted by law).

The collateral for the transaction consists of a static pool of 26 floating-rate mortgages with a $300.6 million current balance, secured by 44 transitional commercial and multifamily properties. Nine of the loans have a future funding component that has yet to be fulfilled in its entirety, and the aggregate remaining future funding requirements total $7.1 million (ranging from $150,000 to $1.9 million per loan). All of the proceeds necessary to fulfill the future funding obligations have been placed into the future funding account and will be released to the respective borrower upon the servicer’s determination that all requirements for such future funding have been met. The future funding is generally to be used for renovations of the properties and leasing costs. Resource Real Estate Funding, Inc. is the primary lending entity of Resource Capital Corp., a publicly traded commercial mortgage real estate investment trust. Many of the properties have a business plan to execute that is expected to increase net cash flow. It is DBRS’s opinion that the business plans were generally achievable given market conditions, recent property performance and adequate available future funding for planned renovations and leasing costs. DBRS modeled loan-level probability of default based on in-place cash flow at each respective property, while loss severity was based on DBRS stabilized cash flow. For modeling purposes, DBRS assumed that the maximum loan commitment was outstanding, as opposed to the current loan balance. All references to percentages of the pool in this report are based on the maximum mortgage loan commitment of $307.8 million, unless stated otherwise.

Three loans — Forest Apartments, Mountain View Apartments and West Sunset Square — were not closed as of the publication date of the presale report, but subsequently closed prior to closing of this securitization. All proceeds needed to purchase these loans from the seller once they have closed (along with any future funding obligations) would have been reserved in the unused proceeds account. This account will not exist, as all loans are now closed.

The ratings assigned to the Notes by DBRS are based exclusively on the support provided by the transaction structure and the credit underlying trust assets. All classes will be subject to ongoing surveillance, which could result in upgrades or downgrades by DBRS after the date of issuance.

For more information, please refer to the DBRS presale report on the DBRS website.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are CMBS Rating Methodology and Unified Interest Rate Model for U.S. RMBS Transactions, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The Rule 17g-7 Report of Representations and Warranties is hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.