Fitch Takes Various Actions on CMLS's Commercial Servicer Ratings

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has taken the following actions on CMLS Financial Ltd.'s (CMLS, or the company) commercial servicer ratings:

--Primary servicer rating upgraded to 'CPS3+' from 'CPS3';

--Master servicer rating upgraded to 'CMS3' from 'CMS3-';

--Loan level special servicer rating affirmed at 'CLLSS3'.

Each of Fitch's servicer ratings reflect CMLS's experienced management group, the company's limited but sufficient internal control environment, and the financial condition of CMLS Financial.

The upgrade to the primary servicer rating reflects CMLS's continued dedication to employee development and training, growing servicing capabilities through developing proprietary technology, and improved internal controls and technology over investor reporting. Previously, Fitch noted reporting errors as a trend and concern; in the past 12-24 months, CMLS had one incident of reporting restatement/error and no incidents of late reporting. The rating upgrade also reflects Fitch's assessment of CMLS's strong and stable management depth with low turnover, and the stabilization of staff-level turnover.

The upgrade to the master servicer rating is driven by CMLS's investment in technology enhancing the company's reporting capabilities, as well as CMLS's recent appointment as master servicer with an external primary servicer; this represents CMLS's first assignment overseeing an external primary servicer. The master servicer rating also reflects potential advancing obligations under stressed scenarios relative to the company's liquidity and earnings and loan concentrations. Advancing concerns are also mitigated by low delinquency rates and the presence of back-up advancing agents in Canadian CMBS.

The loan level special servicer rating reflects CMLS's experienced asset manager and senior managers, development of proprietary technology used in asset management, as well as the company's limited special servicing staffing and related capacity constraints and the nature of the Canadian commercial mortgage market.

CMLS Financial Ltd. (CMLS) is a privately owned nonbank lender and servicer that acts primarily as a mortgage broker placing capital from institutional and fund investors into commercial mortgages across Canada. CMLS has been originating and servicing commercial real estate (CRE) loans since 1974 and is an active participant in government-sponsored and private Canadian securitization markets.

As of June 30, 2015, CMLS was the named master and primary servicer for 88 CMBS loans totaling $780.8 million, an increase from 25 loans totaling $247.7 million at year-end 2012. CMLS was also the named primary servicer (reporting to an external master) for three CMBS loans totaling $401.1 million. Also as of June 30, 2015, CMLS was the named master servicer with an external primary servicer for 13 CMBS loans totaling $100.4 million. This represents CMLS's first assignment overseeing an external primary servicer.

As of June 30, 2015, CMLS was named special servicer for 102 CMBS loans totaling $1.3 billion for four CMBS transactions, with no loans in special servicing. As of the same date, CMLS was named special servicer for 1,666 non-CMBS loans totaling $9.2 billion, also with no loans in special servicing. CMLS has seen a continued increase in named special servicing for both the CMBS and non-CMBS portfolios, congruent with the company's continued servicing portfolio growth.

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=991668

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/20151001006730/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
Daniel Chambers
Managing Director
+1- 212-908-0782
or
Media Relations:
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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