Fitch Affirms BNY Mellon's Commercial Servicer Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed BNY Mellon's (BNYM) commercial mortgage services (CMS) group's servicer ratings as follows:

--Commercial primary servicer rating at 'CPS2';

--Commercial master servicer rating at 'CMS3+';

--Commercial loan level special servicer rating at 'CLLSS3'.

The primary and master servicer ratings reflect CMS's continued demonstrated ability to effectively service mortgage loans (including loans on esoteric assets), its small, experienced servicing team, evolving technology platform, and limited internal controls outside of management reviews. While the bank has several layers of operational and regulatory controls, there are limited reviews of the servicing platform and ongoing operational controls are primarily based on management reviews.

The master servicer rating also reflects CMS's limited oversight of external primary servicers. The bank oversees one CMBS primary servicer, performing a desktop audit annually, as well as two non-CMBS primary servicers that manages franchise loan structured transactions.

The loan level special servicer rating reflects CMS's highly experienced yet small special servicing team with limited depth due to size as well as the esoteric nature of the assets it services. The majority of the named special serviced assets are timberland and franchise loans that may include real estate as a component of the collateral. The bank has limited experience with traditional asset types and is named on one CMBS transaction collateralized by an office building with a single tenant.

All three ratings also reflect run-off in the bank's servicing portfolio. Future growth is expected to come mainly from the bank's plans to enter the single family rental (SFR) market as a third-party master and primary servicer. CMS benefits from its long-standing relationships and history servicing non-traditional, esoteric assets and has invested in technology and resources to build out an infrastructure to support SFR servicing. Fitch believes the SFR servicing market, the majority of which resides with one servicer, will benefit from additional entrants.

As of Sept. 30, 2015, CMS acted as primary servicer for nine CMBS loans totaling $1.3 billion and 124 non-CMBS loans with an unpaid balance of $113.7 million. The CMBS portfolio is predominantly timber and multifamily properties. The non-CMBS portfolio includes franchise restaurant loans. Also as of Sept. 30, 2015, CMS was named master servicer for 26 loans in six transactions totaling $1.4 billion, and the company was named special servicer on 106 loans with an unpaid principal balance of $1.3 billion. Most of the special servicing by balance consisted of timber and office building transactions (three loans, $1.2 billion).

The servicer rating is based on Fitch's methodology, as described in the reports highlighted at the end of the press release.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998689

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160129005880/en/

Fitch Ratings
Primary Analyst
James Bauer
Director
+1-212-908-0343
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Adam Fox
Senior Director
+1-212-908-0869
or
Committee Chairperson
Brook Sutherland
Senior Director
+1-312-606-2346
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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