Fitch Affirms Situs Commercial Mortgage Servicer Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the primary servicer rating of Situs Asset Management LLC at 'CPS2-' and the special servicer rating of Situs Holdings, LLC at 'CSS2'.

Situs Asset Management LLC (SAM), the primary servicer, and Situs Holdings, LLC (Situs Holdings), the special servicer, are the commercial mortgage servicing business lines of the parent company (Situs). Situs operates as a commercial real estate loan and advisory company with various business lines including consulting services, staffing and outsourcing solutions, realty advisory services, and European servicing. Situs does not originate commercial mortgage loans or invest in CMBS-controlling class positions. Situs Holdings provides asset management and special servicing exclusively for third-party clients. Assignments include a mix of legacy and recent vintage CMBS transactions, nonperforming loan portfolios, and 11 single-family rental transactions.

The affirmation of SAM's primary servicer rating reflects the company's maturing internal control environment, improved efficiency following the company's conversion to Enterprise, improved employee turnover and staffing metrics, as well as demonstrated proficiency in commercial loan servicing.

The special servicer rating affirmation of Situs Holdings, LLC reflects Fitch's assessment of the experienced asset managers, internal controls, and effective asset management technology, as well as significantly elevated turnover in response to declining servicing volume. While Fitch notes elevated turnover of 69% as a concern, including three senior management departures, more than half of the employee separations were internal transfers to other Situs business lines and the average experience and tenure of special servicing staff did not decline materially.

The ratings of both companies also consider 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.

In March 2015, Stone Point Capital, LLC (SPC) acquired the majority ownership in Situs by purchasing the ownership interests held by the Ranieri Group and several minority owners. SPC, a private equity firm focused on global financial services with real estate experience, has raised and managed six private equity funds with aggregate committed capital of approximately $18.2 billion.

As of Sept. 30, 2015, SAM's primary servicing portfolio consisted of 956 non-CMBS loans totaling $22.3 billion and 223 CMBS loans totaling $5.6 billion. As of the same date, Situs Holdings was named special servicer on 1,044 loans in 25 CMBS transactions totaling $19.2 billion, and the company was actively special servicing 35 loans totaling $391.4 million and was responsible for six real estate owned (REO) assets totaling $85 million. Situs Holdings, through a subsidiary, also performs asset management and REO disposition services for approximately $868 million 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. 2014, and 'Rating Criteria for Structured Finance Servicers' dated April 2015, available on Fitch's web site www.fitchratings.com.

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=997147

Endorsement Policy

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

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View source version on businesswire.com: http://www.businesswire.com/news/home/20151221005800/en/

Fitch Ratings
Primary Analyst
Adam Fox
Senior Director
+1-212-908-0869
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
James Bauer
Director
+1-212-908-0343
or
Committee Chairperson
Daniel Chambers
Managing Director
+1-212-908-0782
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
[email protected]

Source: Fitch Ratings

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