May 23, 2019—Morningstar Credit Ratings, LLC today affirmed its MOR CS1 commercial mortgage special-servicer ranking and MOR CS2 commercial mortgage primary-servicer ranking for C-III Asset Management LLC, a wholly owned subsidiary of C-III Capital Partners LLC. Morningstar’s forecast for both rankings remains Stable.
Morningstar affirmed the primary-servicer ranking based on the following factors:
- C-III’s solid staff experience and operational resources, which include the company’s portfolio-investment surveillance, special-servicing groups, and primary-servicing staff.
- Its sound procedures for controlled and proactive asset administration to address complex loan structures and asset management, including its expanding work for collateralized loan obligation transactions. While the company has not primary-serviced loans in commercial mortgage-backed securities for the past few years, it continues to service third-party loans warehoused for securitization and subject to similar reporting standards.
- C-III’s effective and integrated technology platform for loan administration, credit management, and investor reporting. It has enhanced data security and data-recovery preparedness as well.
- A thorough internal-audit and compliance program, which centers on annual Regulation AB attestations, quarterly reviews that examine servicing (and special-servicing) functions, and various control mechanisms embedded in the company’s technology tools. All audits completed through 2018 have been satisfactory overall.
Although C-III substantially reduced its special-servicing workforce in 2018 because of easing loan-transfer activity and lower managed volume, our affirmed special-servicer ranking recognizes the company’s retained organizational depth, strong senior leadership, highly experienced asset managers, and asset mangers’ reasonable workload ratios. The special-servicer ranking also considers C-III’s:
- Thorough and well-controlled asset-deliberation practices;
- Well-designed technology for workflow and asset management, analytics, and reporting for CMBS and other real estate investment structures;
- Extended track record of excellent resolution results involving many challenging assets; and
- Proactive real estate owned property oversight, which includes a robust property-manager audit program.
As of Dec. 31, 2018, C-III’s total primary-servicing portfolio consisted of 241 loans with an aggregate unpaid principal balance of approximately $4.88 billion.
As of Dec. 31, 2018, C-III was the named special servicer on 117 CMBS transactions and one Freddie Mac securitization that together consisted of 1,597 loans with an approximate UPB of $19.75 billion. It also was the named servicer and special servicer on one legacy commercial real estate collateralized debt obligation with two remaining loans and servicer on two newer-issue CLO transactions containing 39 loans (and special servicer on one of these). The company’s total active special-servicing portfolio contained 224 assets (66 loans and 158 REO properties) with a combined UPB of approximately $3.75 billion. Except for one loan, all active assets were in securitized transactions.
Morningstar’s operational risk assessments methodology and all published reports are available at www.morningstarcreditratings.com.
Morningstar rankings, forecasts, and assessments in this announcement are not assessments of the creditworthiness of an obligor or a security and thus are not credit ratings subject to NRSRO regulations.
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