Fitch Affirms CWCapital Asset Management LLC's Commercial Special Servicer Rating

Fitch Ratings has affirmed CWCapital Asset Management LLC's (CWCAM) commercial special servicer ratings at 'CSS2+'.

The special servicer rating reflects the company's strong asset management capabilities for defaulted/non-performing loans, extensive workout experience, highly experienced management group and asset managers, as well as CWCAM's dedication to developing and enhancing its special servicing technology. The rating further reflects updates to CWCAM's internal control environment, high asset manager turnover, and the financial condition of its parent company. Fitch also considered CWCAM's use of affiliates that provide asset disposition, property management, and brokerage services.

In 2015, the company reformed its dedicated compliance team to provide for more active and independent oversight of special servicing functions. Fitch expects highly rated servicers to maintain an established control framework with a demonstrated track record. This follows a 2014 decentralization of compliance responsibilities and RegAB noncompliance findings. In 2015, there were no instances of RegAB non-compliance.

CWCAM continues to reduce staff as the portfolio has continued to decline, retaining a seasoned team of experienced asset managers. In the past 12 months asset manager turnover was 37%; overall turnover during the period was 21% down slightly from 23% at Fitch's prior review. CWCAM maintains a strong group of asset managers that average 20 years of experience with an asset to asset manager ratio of 16:1, up from 13:1 at Fitch's prior review and consistent with other Fitch rated legacy CMBS special servicers.

For 2016 special servicer reviews, Fitch is focused on aged specially serviced loans, noting another consecutive year of increased aging. During its servicer reviews, analysts are discussing real estate owned (REO) assets with asset managers and senior management to better understand workout plans. Fitch questions the feasibility of certain long term workout plans given current market conditions, potential motivations for not disposing of assets, and historically higher losses on protracted resolutions, and will address its finding following its 2016 reviews. While CWCAM's CMBS REO portfolio has declined 53% since year-end 2013, it maintains the longest REO hold periods of Fitch rated servicers. CWCAM's CMBS REO inventory has been held as REO for an average of 29.7 months, an increase from 26.8 months and 21.5 months as of year-end 2014 and 2013, respectively. Fitch views positively ongoing efforts by CWCAM to market and liquidate REO assets.

CWCAM, a wholly owned subsidiary of CW Financial Services LLC (CWFS), is one of the three largest CMBS special servicers by active special servicing balance. Currently, the special servicing portfolio is heavily weighted toward pre-2008 vintage transactions, which make up 71% of the portfolio (by count). Since 2013, CWCAM's CMBS named special servicing portfolio has declined by 21% (by balance), and the company's CMBS portfolio has significant maturities scheduled over the next 24 months.

As of Dec. 31, 2015, CWCAM was the named special servicer on 6,813 loans in 134 CMBS transactions, with a UPB of $98.7 billion. As of the same date, the company was actively working out 168 CMBS loans totaling $3.8 billion and 190 REO assets totaling $3.6 billion. Additionally, the company is named special servicer on 544 non-CMBS loans with a UPB of $1.9 billion and is actively servicing 17 non-CMBS loans with a UPB of $104.3 million and five REO with a UPB of $89 million.

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=1005276

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.

Contacts:

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
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.