Fitch Affirms LNR Partners, LLC's Commercial Loan Special Servicer Rating

NEW YORK--()--Fitch Ratings has affirmed the commercial loan special servicer rating of LNR Partners, LLC's (LNR) at 'CSS1-.' LNR performs special servicing and asset management functions for CMBS transactions generally for which it is the controlling class holder. The company's active special servicing portfolio is predominately legacy CMBS transactions; however, LNR has become active in recent vintage CMBS through the acquisition of two 2012 controlling class B-pieces on the secondary market, the purchase of eight B-pieces from 2013 transactions, and named as third-party special servicer for two additional 2013 transactions.

The affirmation of LNR's special servicer rating considered the company's new ownership following the acquisition by Starwood Property Trust (STWD) in April 2013 and reflects asset management capabilities, transparency of information, internal control environment, technology, participation with the CMBS market and corporate governance and conflict of interest policies.

Fitch also noted elevated turnover, internal audit findings, and continued lack of financial statement disclosure on specially serviced loans. Although turnover was elevated at 36%, relative to 16% in 2012, average employee experience and tenure were not negatively impacted. While recent pooling and servicing agreement (PSA) compliance findings included delayed appraisals, delinquent asset summary reports, missing borrower financial statements, and insufficient management review of CREFC reports, Fitch believes LNR maintains a strong internal control environment consisting of documented policies and procedures, as well as internal legal compliance and audit departments. Management responses to the issues were reviewed by Fitch and appeared reasonable. Fitch also noted an increase in missing financial statements for special serviced loans which management has committed to correcting.

As of Dec. 31, 2013, LNR was named special servicer for 10,448 commercial mortgage loans with an unpaid principal balance of $132.9 billion. As of the same date, LNR was actively special servicing 540 loans totaling $7.8 billion and responsible for the management of 420 real estate owned (REO) assets totaling $6.8 billion.

The servicer rating is based on the methodology described in Fitch's reports 'Rating Criteria for U.S. Commercial Mortgage Servicers' dated Feb. 14, 2014, and 'Rating Criteria for Structured Finance Servicers' dated Jan. 30, 2014, available on Fitch's web site www.fitchratings.com.

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

Applicable Criteria and Related Research:

--'Rating Criteria for U.S. Commercial Mortgage Servicers' (Feb. 14, 2014);

--'Rating Criteria for Structured Finance Servicers' (Jan. 30, 2014).

Applicable Criteria and Related Research:

Rating Criteria for U.S. Commercial Mortgage Servicers

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

Rating Criteria for Structured Finance Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731750

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827344

Contacts

Fitch Solutions
Media Relations
Sandro Scenga, New York
Tel: +1 212-908-0278
Email: sandro.scenga@fitchratings.com
or
Primary Analyst
Adam Fox
Senior Director
+1-212-908-0869
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Howard Miller
+1-212-908-0737
or
Committee Chairperson
Daniel Chambers
Managing Director
+1-212-908-0782

Sharing

Contacts

Fitch Solutions
Media Relations
Sandro Scenga, New York
Tel: +1 212-908-0278
Email: sandro.scenga@fitchratings.com
or
Primary Analyst
Adam Fox
Senior Director
+1-212-908-0869
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Howard Miller
+1-212-908-0737
or
Committee Chairperson
Daniel Chambers
Managing Director
+1-212-908-0782