Fitch Affirms RED Mortgage Capital's Servicer Rating

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings affirms the commercial real estate servicer rating for RED Mortgage Capital (RED) as follows:

--Commercial primary servicer at 'CPS2-'.

The primary servicer rating reflects RED's long history of commercial real estate (CRE) mortgage servicing experience, particularly for government sponsored entity (GSE) multifamily and healthcare properties. Also considered were the company's experienced and tenured management and staff, appropriate control environment and strong technology platform. The rating also reflects the 'A' Issuer Default Rating (IDR) of ORIX Corporation, parent of ORIX USA Corporation which owns RED's parent, RED Capital Group.

Fitch found RED to maintain robust technology, including McCracken Financial Solution's Strategy CRE servicing application supplemented with ancillary applications that automate many servicing functions and create efficiencies as the platform grows. Automated operations, such as financial statement analysis and risk ratings are subject to appropriate controls via asset manager review and analysis.

As of March 31, 2016, RED's total servicing portfolio consisted of 1,947 loans totaling $15.6 billion, all of which were multifamily or healthcare related properties. The servicing portfolio is comprised of approximately 40% Fannie Mae, 57% FHA/GNMA, 1% Freddie Mac Small Balance loans and 1% balance sheet loans. Balance sheet loans are transitional and short term in nature and expected to be eligible for traditional GSE financing once stabilized.

RED originated approximately $2.2 billion of mortgage loans in 2015 and projects origination volume of $3 billion in 2016 which should lead to servicing portfolio growth as RED has retained servicing for the majority of these loans. To date, RED has originated 66 small balance loans and projects small balance program origination volume of $240 million in 2016. RED contributed loans to its first small balance securitization transaction in 2016 and will act as sub-servicer and special servicer for the loans they contributed.

RED anticipates diversifying its servicing platform through its recent designation as an approved Freddie Mac small balance loan seller/servicer and could enter the CMBS primary servicing market in the future. In addition, RED could expand into third-party servicing independently or through its affiliation with ORIX USA.

The servicer rating is based on the methodology described in Fitch's reports 'Rating Criteria for U.S. Commercial Mortgage Servicers,' dated Feb. 14, 2014, and 'Rating Criteria for Structured Finance Servicers' dated July 1, 2016, available on Fitch's web site www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Rating Criteria for Structured Finance Servicers (pub. 01 Jul 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884140

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009559

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160727006317/en/

Fitch Ratings
Primary Analyst
Andrew Foster
Director
+1-212-908-0714
Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
or
Secondary Analyst
James Bauer
Director
+1-212-908-0343
or
Committee Chairperson
Daniel Chambers
Managing Director
+1-212-908-0782
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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