Fitch Affirms CWCapital Asset Management's CMBS Special Servicer Rating

NEW YORK--()--Fitch Ratings has affirmed the commercial mortgage special servicer rating of CWCapital Asset Management LLC (CWCAM) at 'CSS1-'.

The affirmation of the special servicer rating reflects Fitch's assessment of the company's asset management capabilities for defaulted/non-performing commercial real estate assets and extensive workout experience having resolved almost 500 CMBS loans in 2013, its experienced management team, proprietary asset management technology, and multi-layered internal control framework.

The affirmation also considered the 2013 spin-off of the Real Estate Dispositions Team (REDS) from the special servicer into a new company that co-brokers the sale of loan and REO assets. While Fitch recognizes the benefit of dedicated brokerage resources in the disposition process, our servicer reviews continue to focus on the potential conflicts of interest when engaging affiliates. REDS has co-brokered approximately 85% of all CWCAM loans and REO assets since REDS' formation in 2013 and currently works exclusively for CWCAM. Based on a review of the brokerage commissions charged, Fitch concluded the fees did not appear to be above market terms and noted that REDS received 23% of such brokerage fees for the co-brokerage services it provides.

In 2013 CWCAM marketed 134 non-performing commercial mortgage assets with a UPB of $3.7 billion in a bulk sale marketed through both CBRE and Auction.com (CWFS holds a non-controlling interest in Auction.com) across 28 legacy CMBS transactions. The sale was completed in 1Q'14 with 122 of the 134 assets offered being sold, averaging approximately 101% of the most recent appraised value.

CWCAM, which is among the three largest CMBS special servicers, acts as special servicer on behalf of affiliates who own controlling positions of CMBS or CDO transactions or for third-party clients. Approximately 44% of CMBS transactions serviced are for affiliate companies.

CWCAM's current CMBS strategy with respect to new issue transactions is to act as an independent special servicer for clients who contribute capital to purchase B-pieces and CWCAM contributes underwriting and/or surveillance in addition to being named as the special servicer. The company currently does not deploy capital for the acquisition of new issue CMBS B-pieces on its own or with affiliates; however, has deployed capital to retain control of legacy CMBS transactions.

As of Dec. 31, 2013, CWCAM was the named special servicer on 9,233 loans in 161 CMBS transactions with a UPB of $125.5 billion. As of the same date, the company was actively servicing 335 CMBS loans totaling $9.7 billion and 405 REO assets totaling $8.1 billion. Additionally, the company is named special servicer on 875 non-CMBS loans with a UPB of $3.6 billion and is actively servicing 45 non-CMBS loans with a UPB of $179.4 million and 19 REO with a UPB of $269.4 million. At Dec. 31, 2013, approximately 97% of the company's special servicing portfolio was CMBS.

The servicer rating is based on the methodology described in Fitch's reports 'U.S. Commercial Mortgage Servicer Rating Criteria,' dated Feb. 18, 2011, and 'Rating Criteria for Structured Finance Servicers' dated Feb. 6, 2013, 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=849714

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Contacts

Fitch Ratings
Primary Analyst
Howard Miller
Director
+1-212-908-0737
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
James Bauer
Director
+1-212-908-0343
or
Committee Chairperson
Adam Fox
Senior Director
+1-212-908-0869
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Howard Miller
Director
+1-212-908-0737
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
James Bauer
Director
+1-212-908-0343
or
Committee Chairperson
Adam Fox
Senior Director
+1-212-908-0869
or
Media Relations
Sandro Scenga, New York, +1-212-908-0278
sandro.scenga@fitchratings.com