FOR FURTHER INFORMATION
AT REALTY FINANCE CORPORATION:
Daniel Farr
Chief Financial Officer
(860) 275-6234
dfarr@realtyfinancecorp.com
April 15, 2009
REALTY FINANCE CORPORATION RECEIVES NOTICE OF
NON-COMPLIANCE WITH CDO 2007-1 COVERAGE TESTS
HARTFORD, Conn., April 15 - Realty Finance Corporation (Other OTC: RTYFZ) announced that on April 14, 2009 the Company received written notice from the trustee of RFC CDO 2007-1, Ltd. ("CDO II"), in accordance with the Indenture, dated as of April 2, 2007, that on the April 7, 2009 payment date, CDO II failed certain par value trigger tests (the "Par Value Tests") which resulted in (i) certain interest payments normally scheduled to the debt and equity holders of CDO II being allocated to the senior noteholders (i.e. Class A-1) and (ii) any available principal proceeds being allocated to the senior noteholders. Consequently, the Company will not receive any cash flow distributions on the subordinated notes and equity investments owned by the Company and/or its affiliates in CDO II, or with respect to any subordinate collateral management fee, until such time, if ever, the Par Value Tests are complied with. Even if the Par Value Tests are eventually complied with, the Company's ability to obtain regular cash flows from the assets securing CDO II is dependent upon continuing to meet interest coverage and par value tests within CDO II. The failure of the Par Value Tests was due to (i) impairment of certain of the Company's loans as a result of borrower defaults and (ii) rating agency downgrades on certain of the Company's commercial mortgage-backed securities ("CMBS") held by CDO II.
If the Par Value Tests had not failed, the Company would have received approximately $487,000 in interest distributions and $353,000 in subordinate collateral management fees for the April 7, 2009 CDO II payment date.
About Realty Finance Corporation
Realty Finance Corporation is a commercial real estate specialty finance company primarily focused on originating, acquiring, investing in, financing and managing a diversified portfolio of commercial real estate-related loans and securities. Realty Finance Corporation has elected to qualify to be taxed as a real estate investment trust, or REIT, for federal income tax purposes. For more information on the Company, please visit the Company's website at http://www.realtyfinancecorp.com.
Forward-Looking Information
This press release contains forward-looking statements based upon the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. The factors that could cause actual results to vary from the Company's forward-looking statements include the Company's future operating results, its business operations and prospects, general volatility of the securities market in which the Company invests and the market prices of its common stock, the effect of trading on the Pink Sheets, the Company's ability to begin making investments in the future, availability, terms and deployment of short-term and long-term capital, availability of qualified personnel, changes in the industry, interest rates, the debt securities, credit and capital markets, the general economy or the commercial finance and real estate markets specifically, performance and financial condition of borrowers and corporate customers, increased prepayments of the mortgage and other loans underlying the Company's investments, the status of the class action lawsuit, the potential derivative shareholder claim and any future litigation that may arise, the ultimate resolution of the Company's six non-performing loans totaling $128.4 million and the Company's three Watch List loans totaling $75.5 million, the monetization of the Company's joint venture investments, the ability to come back into compliance with the overcollateralization tests in CDO I and the par value tests in CDO II, whether the Company remains as the collateral manager of CDO II, available liquidity, and other factors, which are beyond the Company's control. The Company undertakes no obligation to publicly update or revise any of the forward-looking statements. For further information, please refer to the Company's filings with the SEC.