Fitch Ratings has upgraded the primary servicer rating of Situs Asset Management LLC to 'CPS2-' from 'CPS3+' and affirmed the special servicer rating of Situs Holdings, LLC at 'CSS2'.
The upgrade of Situs Asset Management LLC's (SAM) primary servicer rating is primarily the result of improved operational efficiency and supplemental internal controls, improved technology and the addition of borrower and investor web portals following a July 2012 conversion to Enterprise! In addition, the company improved disaster recovery and business continuity procedures, as well as hired a primary servicing compliance officer. Fitch noted 46% aggregate turnover among SAM employees following several consecutive years of high turnover as a concern; however, Fitch views favorably SAM's aggressive efforts to retain experienced staff, the experience and tenure of the management team and efforts to relocated servicing employees to less competitive job markets, and significant commitment to employee training.
The affirmation of the special servicer rating of Situs Holdings, LLC reflects Fitch's assessment of the experienced asset managers, internal controls, and effective asset management technology of Situs, as well as elevated turnover in response to declining servicing volume. Special servicing assignments include legacy and recent vintage CMBS transactions, non-performing loan portfolios, and a significant number of single family rental transactions.
The rating of both companies also considers Fitch's assessment of the experienced and tenured management team, presence of individual compliance officers as well as internal and external audits for each servicing unit, disaster recovery and business continuity procedures, and financial condition. Fitch does not expect any impact to either of the servicer ratings following the Jan. 6, 2015 announcement that Stone Point Capital, LLC intends to acquire majority ownership of the parent company. The transaction is expected to close in the first quarter of 2015 (1Q'15) and based on information provided by senior management of Situs, is not expected to result in any negative impact to the servicing operations.
As of Sept. 30, 2014, Situs Asset Management LLC's primary servicing portfolio consisted of 707 non-CMBS loans totaling $15.6 billion and 161 CMBS loans totaling $2.5 billion of CMBS loans. As of the same date, Situs Holdings was named special servicer on 1,429 loans in 22 CMBS transactions totaling $22 billion. As of the same date, the company was actively special servicing 46 loans totaling $509.8 million and was responsible for 14 real estate owned (REO) assets totaling $149.6 million. Situs Holdings, through a subsidiary, also performs asset management and REO disposition services for approximately $1 billion of non-performing commercial mortgage loans on behalf of institutional and entrepreneurial investors.
The servicer ratings are based on the methodology described in Fitch's reports 'U.S. Commercial Mortgage Servicer Rating Criteria' dated Feb. 14, 2014, and 'Rating Criteria for Structured Finance Servicers' dated Jan. 30, 2014, available on Fitch's web site www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Commercial Mortgage Servicer Rating Criteria' (Feb. 14, 2014);
--'Rating Criteria for Structured Finance Servicers' (Jan. 30, 2014).
Applicable Criteria and Related Research:
Rating Criteria for U.S. Commercial Mortgage Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382
Rating Criteria for Structured Finance Servicers
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731750
Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=978956
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