ֳ

Rating Action Commentary

ֳ Places C-III's Servicer Ratings on Watch Following Greystone Acquisition

Fri 10 Jan, 2020 - 4:11 PM ET

ֳ-New York-10 January 2020: ֳ has placed C-III Asset Management LLC's (C-III) commercial special servicer rating of 'CSS2+' and primary servicer rating of 'CPS2' on Rating Watch Evolving (RWE) following the sale of the company to Greystone.

The RWE reflects the potential impact of the acquisition to several key rating drivers in ֳ's analysis including, company/management, financial condition, staffing/training, procedures and controls, loan administration, and primary servicing technology. ֳ has received preliminary information on the integration of the two companies and will resolve the RWE in a period of six months following a full operational review of the combined company.

C-III was acquired by Greystone from C-III Capital Partners. Greystone is a commercial real estate lending, investment, and servicing and advisory company that maintains a commercial primary servicing portfolio of approximately $42 billion in predominately multifamily and healthcare properties. The acquisition was performed to add a complementary special servicing platform but also includes redundant primary servicing platforms. ֳ expects Greystone to integrate the servicing platform within six months. ֳ does not currently rate Greystone as a commercial loan servicer.

ֳ will need to re-assess the new ownership support and the financial strength of the parent, which are key to the viability of the servicing entity's business plan. Additionally, there remains the potential for heightened operational risks in the special servicing group due to the declining portfolio as well as in the primary servicing group due to the integration with Greystone's servicing platform.

C-III performs primary servicing for third-party, internal pre-securitization, and CLO originations of commercial real estate loans and special servicing primarily for legacy CMBS transactions. C-III was previously wholly owned by C3CP and indirectly controlled by Island Capital Group (Island Capital), and affiliates of C-III provided brokerage, lending and investment services.

As of March 31, 2019, C-III's primary servicing portfolio consisted of 122 non-CMBS loans totaling $1.6 billion. Also as of March 31, 2019, C-III was named special servicer on 1,549 CMBS and 28 non-CMBS loans totaling $20.2 billion and was actively working out 56 defaulted CMBS loans totaling $1.3 billion and managing 162 REO assets representing $2.5 billion. The pace of runoff in C-III's named special serviced portfolio since 2016 accelerated faster than its peers as C-III's portfolio is heavily weighted toward legacy CMBS transactions, which continue to see maturities and resolutions. C-III's named special servicing portfolio declined by 67% by loan count since 2016, the highest percentage among ֳ rated special servicers.

Contact:

Primary Analyst
James Bauer
Director
+1-212-908-0343
ֳ, Inc.
300 W 57th St
New York, NY 10019

Secondary Analyst
Adam Fox
Senior Director
+1-212-908-0869

Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785

Media Relations: Hannah James, New York, Tel: +1 646 582 4947, Email: hannah.james@thefitchgroup.com

Additional information is available on
Applicable Criteria
Criteria for Rating Loan Servicers (pub. 23 Feb 2017)
Criteria for Rating North American Commercial Mortgage Servicers (pub. 23 Feb 2017)

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