RFA canada - Debt Placement

RFA Capital Management Inc. specializes in the sourcing and managing of investments in the junior securities of pools of commercial mortgage backed securities ("CMBS"). Junior securities are those rated below investment grade (BBB). The basis object of CMBS is to take a pool of mortgages and sell them into a single purpose entity ("SPE") which then issues bonds to the public secured by these mortgages. The SPE is administered by a trust and is not allowed to enter into any other lines of business. The only assets of the SPE are the mortgages and the only liabilities are the bonds. The bonds are appealing to institutional investors because they are rated by S&P and DBRS. The attractive risk ratings on the bonds come from credit enhancement; the senior bonds are credit enhanced by the fact that the junior bonds suffer any losses first. The bond rating agencies rate the bonds after reviewing the mortgages and the underlying real estate assets. Below is a graphic example of the structure of a CMBS securitization:

Click here to view our CMBS investments transactions.