Professional Documents
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Sorin Funds
Operations Quality Rating Report
Fund Description
Investment Manager: Sorin Capital Management, LLC (“SCM”)
Rated Funds: Sorin Master Fund, Ltd.
Sorin Fund, L.P. (Domestic)
Sorin Offshore Fund, Ltd.
Sorin Plan Offshore Fund, Ltd.
LEAD ANALYST: AUM (as of September 2006): $335mm
Founder and CEO: James J. Higgins
Courtenay Sturdivant,
CPA Minimum Investment: $5mm
Analyst Subscriptions: Monthly
(212) 553-1044
Courtenay.Sturdivant@moodys.com Redemptions: Quarterly with 90 day notice; 20% gate
Lockup: 1 year
CONTACTS: Fund Inception Date: August 1, 2004
Gary Witt, Ph.D. Report Date: September 1, 2006
Managing Director Source: SCM
(212) 553-4352
Gary.Witt@moodys.com
Kevin L. Gaines, CFA Rating Summary: The OQ1- rating1 on the Sorin funds expresses Moody's opin-
VP/Senior Analyst ion that SCM has built and maintains an infrastructure with excellent operations
(212) 553-4513 quality with only a few areas for improvement. The rating considers the nature of
Kevin.Gaines@moodys.com
the investment strategy and the complexities of the asset classes traded.
Jim Leahy, Esq Valuation for some of the Sorin funds' assets, such as the illiquid, securitized prod-
VP/Senior Credit Officer
ucts, is challenging and SCM has a process that strikes a reasonable balance
(212) 553-4187
Jim.Leahy@moodys.com between accuracy and independence. SCM has retained high quality service pro-
viders for administration, audit, prime brokerage, and legal advice as well as for
Michael T. Ryan non-core areas such as systems and human resources. While the founder and
Senior Associate CEO Jim Higgins is clearly the "key man", SCM employs a professional and quali-
(212) 553-1418
Michael.Ryan@moodys.com
fied staff that has extensive experience in the commercial real estate debt market.
The competence of the personnel and robust infrastructure underpin the strong
Brett Hemmerling rating in each category of operations quality.
Investor Liaison
(212) 553-4796
Brett.Hemmerling@moodys.com
WEBSITE:
www.moodys.com
1 For rating framework please see the Moody's Special Report, "Moody's Approach to Evaluating and Assign-
ing Operations Quality Ratings to Hedge Funds", June 27, 2006.
September 1, 2006
Fund Overview: The rated Sorin funds use a master feeder structure that invests in commercial real estate
debt and derivatives with allocations to Asset Backed Securities and related derivatives. The investment strat-
egy includes taking strategic leveraged credit spread positions in CMBS and ABS across the entire credit spec-
trum. Credit spread risk is either fully or partially hedged with credit default swaps and all interest rate risk is
hedged with various debt and derivative securities. The investment manager, Sorin Capital Management, led
by Jim Higgins ("Higgins") has a core group of traders that have extensive experience and knowledge of the
specialized CMBS market. While the underlying risks of the fund are narrowly focused, a broad range of finan-
cial instruments, such as securitizations and credit derivatives, are utilized to exploit the opportunities associ-
ated with those risks.
2
Figure 1
Rating Details2
1
Moody's Assessment
5
Systems &
Providers
Resources
Reporting &
Operations
Compliance
Valuation
Continuity
Regulatory
Business
Process
Service
Internal
Human
Control
Risk
Source: Moody's
Valuation Process
SCM effectively addresses valuation in multiple ways. Independence is maintained by having dealers send a
copy of their pricing information directly to the administrator. A detailed monthly valuation package reflecting
and summarizing all the pricing information is produced and made available to interested investors. Per its writ-
ten valuation process, SCM attempts to obtain three or more dealer quotes whenever possible, but for the sake
of increased accuracy, will sometimes use its own valuation as long as it is within the range of outside quotes
received.
Moody's assessment of this valuation process included a review of several monthly valuation packages, lengthy
discussions with relevant SCM personnel, discussions with independent CMBS market participants, and a visit
to the administrator. Due to the complexity and illiquidity of some of its investments, risk remains in Sorin's val-
uation process. However, in Moody's opinion SCM has done a very good job at minimizing that risk given the
investment strategy.
Service Providers
• Auditor
SCM uses Rothstein Kass & Co. as its independent auditor. Moody's assessment is that the auditor possesses
the knowledge and acumen to provide sufficient audit and attest functions. Rothstein Kass & Co. has over 20
years of experience servicing domestic and offshore hedge funds, funds of funds, private equity funds and com-
modity pools. The firm has over 650 employees in NY, NJ, CA, TX, CO and the Cayman Islands. Rothstein
Kass & Co. provides a variety of services to its alternative investment clients including start-up and partnership
organization, audit, tax and accounting services, and management information systems and support. Rothstein
Kass & Co. performed the 2004 and 2005 fund audits for SCM and is engaged to perform the 2006 fund audit.
In addition Rothstein Kass & Co. is engaged to perform the 2005 audit on SCM, the investment manager.
2 OQ Ratings are comprised of five numerical levels indicating operational strengths and weaknesses. The graph above represents rating subcatego-
ries scored from “1” being Excellent to “5” being Poor.
Management Team
Name Professional & Educational Experience
Jim Higgins From March 1997 to January 2004, Mr. Higgins was the co-Head of Bear Stearns'CMBS/Commercial Mort-
Founder and Chief gage business, where he was responsible for all capital commitment, new issuance, securitization, secondary
Executive Officer trading, structuring and research for CMBS, commercial mortgage whole loans and commercial real estate
CDOs. Under Mr. Higgins' leadership, Bear Stearns' CMBS business grew five-fold and was profitable in every
year during Mr. Higgins' tenure. Prior to Bear Stearns he was a trader for Smith Barney and began his career
as a commercial real estate lender for American National Bank, a subsidiary of First Chicago. Mr. Higgins has
an MBA from the University of Texas and a BBA in Finance from the University of Notre Dame.
Damon Caputo From October 1998 to January 2004, Mr. Caputo was employed at Bear, Stearns & Co., Inc., most recently as
Managing Director Managing Director and Head of CMBS Structuring. During his five years at Bear Stearns, Mr. Caputo struc-
tured and closed more than 50 CMBS and 10 CDO transactions; highlights include developing and obtaining
ratings for some of the most innovative and complex structures in the CMBS and CDO markets. Prior to Bear
Stearns, Mr. Caputo spent three years as a structured finance analyst with Criimi Mae (NYSE: CMM), a publicly
traded mortgage REIT which specialized in non-investment grade CMBS and commercial mortgage origina-
tion. He was responsible for the reverse engineering, valuation and structuring of all transactions owned and/
or issued by the company. Mr. Caputo brings significant structured finance knowledge and expertise to Sorin.
Mr. Caputo graduated from the University of Maryland with a Bachelor of Science in Accounting.
Jason Kelley Mr. Kelley joined Sorin in August 2004 from Real Estate Capital Partners ("RECP") where he was an Invest-
Senior Vice President and ment Manager and Senior Acquisitions Analyst. At RECP Mr. Kelley was responsible for office, retail and
Chief Credit Officer industrial property acquisitions in Philadelphia, New Jersey, Houston, Kansas City and Phoenix and performed
all financial, legal and property level due diligence for any proposed investment in those markets. Prior to
RECP, Mr. Kelley worked at Vornado Realty Trust as an associate in the Acquisitions and Capital Markets
groups where he worked on real estate transactions including the construction of the new Bloomberg building
in midtown Manhattan and the World Trade Center acquisition. He began his career with Donaldson Lufkin &
Jenrette as a mortgage underwriter in the commercial real estate finance group. Mr. Kelley graduated from
Princeton University with a Bachelor of Arts degree in American History.
Thomas Tam, CPA Mr. Tam joined Sorin in September 2004 from Fletcher Asset Management where he spent four years as Con-
Chief Financial Officer & troller. At Fletcher, he was responsible for the accounting and operations of twelve domestic and offshore
Chief Compliance Officer master-feeder investment vehicles. Prior to Fletcher, Mr. Tam spent three years at Tiger Management as a
Fund Controller where he had extensive exposure to a broad cross-section of investment products including
equities, fixed income, options, futures, foreign currency forwards, equity and fixed income derivatives and
private placements. Before joining Tiger, Mr. Tam spent three years as a Supervising Senior Accountant for
American Express Tax & Business Services (formerly Goldstein Golub Kessler & Co.) where his clients included
Tiger and Fletcher. Mr. Tam began his career with Grant Thornton as an auditor. Mr. Tam graduated from Pace
University with a Bachelor of Business Administration degree in Public Accounting. He is a Certified Public
Accountant.
Source: SCM
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