Briefs: DebtX, Red Mortgage Capital

DebtX, Boston, launched a new credit-rating system for commercial real estate whole loans to enable financial institutions to make better risk and pricing decisions.

DXScore factors in loan characteristics such as collateral type, geography, performance level and loan structure and produces a common benchmark for comparison. It gives a numerical rating between zero (least creditworthy) and 120 (most creditworthy) to allow institutions to easily compare different CRE loans.

With that insight, banks, insurance companies, warehouse lenders and other institutions can determine whether to buy, hold, originate, monitor or sell a CRE loan as part of an active portfolio management strategy, said DebtX CEO Kingsley Greenland.

“DXScore distills the characteristics of different CRE loans into a single number, so credit risk can be measured accurately across the various CRE loan types,” Greenland said, noting that the system uses data gathered from tens of thousands of loans DebtX has offered over the last 15 years.  

Greenland said financial institutions typically focus on a loan’s premium or discount to par, “but par pricing doesn’t express the inherit credit risk in a loan,” he said. “Similar to junk bonds, a riskier loan can price at par if the coupon is high enough.”

Greenland noted that DXScore considers a broader set of factors than the loan’s desired yield. “As a result, it can identify strengths and weakness that are often undetected at origination or during the life of the loan,” he said.  

ORIX USA Increases RED Capital Group Ownership to 100 Percent
ORIX USA Corp., Dallas, purchased the minority interests in RED Capital Group LLC that it did not already own on Feb. 22. ORIX purchased the remaining 12 percent of RED, making it a wholly owned subsidiary.

RED’s executive management team will remain in place and continue to operate RED as an independent entity based in Columbus, Ohio.

RED Capital Group has provided more than $72 billion of integrated debt and equity capital since 1990 to the seniors housing and health care, multifamily, affordable and student housing industries.