Summary: Jefferies LoanCore LLC

Experienced management team Ongoing business support from its joint venture owners Strategic importance to Jefferies Group LLC Limited scale and concentration in commercial real estate Fluctuating capital base Dependence on repurchase agreement funding facilities Our ratings on JLC reflect the company's limited business scale and concentration in higher-risk commercial real estate (CRE) mortgages, limited permanent equity base, and dependence on less-stable repurchase agreement funding. The credit, capital, and distribution support provided by JLC's joint venture (JV) owners and the experienced management team are positive rating factors. JLC's originates CRE loans, principally for sale into CMBS conduits, and to a lesser extent to transitional properties as well as other CRE investments. We believe this concentration leaves the firm's business and profitability

...Our ratings on JLC reflect the company's limited business scale and concentration in higher-risk commercial real estate (CRE) mortgages, limited permanent equity base, and dependence on less-stable repurchase agreement funding. The credit, capital, and distribution support provided by JLC's joint venture (JV) owners and the experienced management team are positive rating factors. JLC's originates CRE loans, principally for sale into CMBS conduits, and to a lesser extent to transitional properties as well as other CRE investments. We believe this concentration leaves the firm's business and profitability exposed to volatile CMBS market conditions. The company's leverage and preferred equity fluctuate as it draws equity from its JV owners and debt to support loan originations and then repays them following the sale of loans. We expect that JLC will operate with debt to adjusted total equity leverage of 3x to 5x. JLC is a JV owned by the sovereign wealth fund of Singapore (GIC) Jefferies Group...

Summary