DBRS Confirms Berkadia’s Servicer Evaluations of Superior; Removes Under Review Status

DBRS confirms the Superior evaluations of Berkadia Commercial Mortgage LLC’s (Berkadia, or, the Company) Primary and Master servicing capabilities and has removed them from UR-Developing. Berkadia has completed its plan to reduce its domestic servicing staff and shift servicing functions to its offshore operations in Hyderabad, India and its outsourced operations in Manila, Philippines. While the current servicing model with its increased reliance on offshore operations is relatively new and untested, Berkadia has implemented the necessary controls and provided training and management oversight in an effort to ensure it is successful. DBRS will continue to monitor Berkadia’s progress over the coming months.

Berkadia is a joint venture between Berkshire Hathaway Inc. (Berkshire) and Leucadia National Corporation (Leucadia). With the acquisition of the Company by Berkshire and Leucadia, the overall financial strength of the Company has been greatly enhanced following the voluntary bankruptcy filing of the predecessor company in October 2009. The Company continues to be profitable and enjoys substantial liquidity for originations, advancing and operations provided by the joint venture partners.

Berkadia’s CMBS master and primary servicing groups have been prime business units of the Company’s since 1994. While Berkadia currently remains one of the largest CMBS master servicers by volume, the Company is only selectively bidding on new master servicing contracts. Therefore, one of Berkadia’s challenges is its ability to participate in the current CMBS servicing environment.

Over the years, Berkadia has developed a respected industry reputation through its highly experienced staff, reliable controls over asset administration, proven technology, knowledgeable customer service and thorough investor reporting. The functional structure of Berkadia allows the Company to effectively meet the demands of all areas of servicing. The Company is able to serve as a highly skilled and efficient intermediary between borrowers and investors, and ultimately improve overall transparency for multiple parties.

The servicer evaluation reflects a comprehensive review of Berkadia’s organizational structure, the management team, asset administration, loss management, technology, staffing and training, procedures and controls, and financial strength.

Notes:

All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is DBRS Commercial Mortgage Servicer Evaluations which can be found on our website under Methodologies.