Kroll Bond Rating Agency Assigns Preliminary Ratings to Elm 2016-1 Trust

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three
classes of debt (“the Debt”) issued by Elm 2016-1 Trust. The Initial
Loans were originated by MidCap Financial Trust (“the Originator”) and
will be serviced by MidCap Financial Services Capital Management, LLC
(“MidCap Financial” or “the Servicer”). This transaction is the
inaugural securitization for the Originator and Servicer, collectively
referred to as “MidCap” or “the Company.”

Founded in 2008, MidCap is a middle market-focused, specialty finance
firm that provides senior debt solutions to companies across all
industries. The Company provides a broad array of products intended to
finance growth and manage working capital. MidCap has a focus on the
direct origination of life sciences loans, real estate loans,
asset-backed loans and leveraged loans.

The Debt will be secured by an initial pool (“the Initial Loans”)
comprised primarily of (i) senior term loans to life sciences companies
(“the Life Sciences Loans”) and (ii) funded pari passu participations in
senior secured real estate loans (“Real Estate Loans”). As of November
1, 2016, the composition of the statistical loans (“the Statistical
Pool”) will consist of 35 loans to 35 obligors with an aggregate
outstanding loan balance of approximately $314.6 million (“Statistical
Pool Balance”). The exposures to Life Sciences Loans and Real Estate
Loans will be approximately 85.3% and 14.7% of the Statistical Pool
Balance, respectively.

The transaction benefits from sufficient credit enhancement and
liquidity, as well as a dynamic structure that accelerates principal
payments on the Debt in the event of weak performance. The transaction
features a 24-month reinvestment period during which time principal
collections may be reinvested in additional loans that meet certain
eligibility criteria.

KBRA analyzed the transaction using KBRA’s General
Rating Methodology for Asset-Backed Securities
published on
July 30, 2012.

For complete details on the analysis, please see KBRA’s Presale Report, Elm
2016-1 Trust
, which was published today at www.kbra.com.

Class   Rating   Initial Debt Balance (USD)
A-1 A(sf) $ 25,000,000
A-2 A(sf) $ 195,200,000
B BBB(sf) $ 31,500,000

Representations and Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required,
pursuant to SEC Rule 17g-7, to provide a description of a transaction’s
representations, warranties and enforcement mechanisms that are
available to investors when issuing credit ratings. KBRA’s disclosure
for this transaction can be found in the report entitled Disclosure is
available at the following link: Elm
2016-1 Trust Representations and Warranties Disclosure
.

Related Publications: (available at www.kbra.com)

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a
Nationally Recognized Statistical Rating Organization (NRSRO). In
addition, KBRA is recognized by the National Association of Insurance
Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical Contacts:
Kroll
Bond Rating Agency

Alan Greenblatt, Director, (646) 731-2496
agreenblatt@kbra.com
or
Lenny
Giltman, Managing Director, (646) 731-2378
lgiltman@kbra.com
or
Anthony
Nocera, Managing Director, (646) 731-2350
anocera@kbra.com