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

DBRS, Inc. (DBRS) has today confirmed the rating on the Floating Rate Notes (the Notes) issued by Resource Capital Corp. CRE Notes 2013, Ltd. as follows:

-- 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)

All trends are Stable.

The rating confirmations reflect the continued stable performance of the pool since issuance in December 2013. The current pool consists of 23 loans secured by traditional commercial real estate assets, including multifamily, retail, office and hotel properties. According to the December 2014 remittance, there has been collateral reduction of 11.0%. The loans benefit from low leverage on a per-unit basis, with the weighted-average debt yield based on the most recently reported net operating income and outstanding trust balance at 10.3%, which is relatively strong, given the pool consists of stabilizing assets.

The collateral loans are secured by stabilizing properties, which carry initial terms of two or three years and include built-in extensions options of up to an additional two or three years. The borrowers are typically new equity sponsors of fairly well-positioned assets within their respective markets. Some loans also contain future funding facilities designed to aid in property stabilization. The releases of designated future funding dollars to individual borrowers are at the discretion of the servicer upon determination that all requirements for such future funding have been met. As of the December 2014 remittance, there is a total of $2.7 million remaining in future funding allocated across six loans, which currently represent 27.2% of the current pool balance.

To date, three loans have been paid in full and two additional loans have experienced partial principal repayment. The Stone Ranch loan, secured by a multifamily property in Dallas, Texas, experienced a $1.0 million partial principal prepayment as a result of insurance proceeds released to the borrower after one of the collateralized buildings was destroyed by a fire in February 2014. The loan now has a balance of $14.5 million, representing 5.3% of the current pool balance.

While the transaction consists of only 23 loans, the pool is diversified as the largest loan, the largest five loans and the largest ten loans account for 8.8%, 35.8% and 61.2% of the current pool balance, respectively. The transaction does have exposure to one sponsor, the Carlyle Group (Carlyle), who sponsors five loans representing 22.1% of the current pool balance. Carlyle is a fully integrated real estate investment firm with $180 billion in total assets around the globe and is considered a strong sponsor.

The ratings assigned by DBRS contemplate timely payments of distributable interest and, in the case of the Offered Notes other than the Class A, Class A-S and Class B Notes, ultimate recovery of Deferred Collateralized Note Interest Amounts (inclusive of interest payable thereon at the applicable rate, to the extent permitted by law). The transaction is a standard sequential pay waterfall.

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

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

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