DBRS Morningstar Confirms Mount Street US (Georgia) LLP’s Commercial Mortgage Primary Servicer and Special Servicer Rankings; Changes Primary Servicer Ranking Trend to Positive

DBRS, Inc. (DBRS Morningstar) confirmed its MOR CS3 commercial mortgage primary servicer and special servicer rankings for Mount Street US (Georgia) LLP (MSUS or the Company). DBRS Morningstar also changed the primary servicer ranking trend to Positive from Stable. The trend for the special servicer ranking is Stable.

MSUS is an indirect operating subsidiary of UK-based Mount Street Group Limited, which owns Mount Street Mortgage Servicing Limited, one of the largest servicers in Europe. Since MSUS began servicing loans in April 2018, it has been building a solid performance record with highly structured, and often syndicated, loans demanding intensive portfolio management and detailed reporting. While most of the servicing still emanates from its first lender bank relationship, MSUS continues to add other lender clients including some assignments involving transactional reviews and project oversight. MSUS does not service for any commercial mortgage-backed securitizations (CMBS), but its personnel are collectively experienced with such work. Although MSUS’ mandates do not involve all servicing tasks, the Company has the procedures and infrastructure to execute all core functions effectively. As a smaller-scale operation, MSUS receives strong parental support to leverage synergies and resources for technology, training, and compliance.

The Company’s strengths for primary servicing include an experienced management and professional team, proactive and controlled asset administration, and a robust technology platform consisting of purchased and proprietary applications, including lender client and borrower web portals. A compliance team oversees a formal training function and an effective audit program, which centers on annual Service Organization Control 1 Type II examinations and quarterly operational reviews. MSUS also has performed effectively during the Coronavirus Disease (COVID-19) pandemic by granting forbearances or structuring other forms of relief for borrowers outside of formal special servicing transfers.

The Positive trend for the primary servicer ranking reflects MSUS’ expanding client base and its favorable performance trajectory as an adept servicer for large and complex assets. The Positive trend also reflects MSUS’ success in effectively counteracting some significant employee turnover in the latter months of 2020 by reinforcing its operation through internal promotions, organizational realignments, and additional hiring. DBRS Morningstar further recognizes the Company’s completed and planned technology advancements and related process improvements as well as its diligent portfolio management and robust audit and compliance program. MSUS also benefits from employee cross training and a change-process program, which continues to generate procedural improvements.

As a special servicer, MSUS has strengthened its operating position this year. In March 2021, CMBS investment and advisory firm Mission Peak Capital (MPC) acquired an ownership stake in MSUS. This transaction enabled MSUS to hire a former MPC senior manager to establish a dedicated special servicing unit, which has grown to a six-member team with experienced personnel for CMBS work. In recent months, MSUS also became the successor special servicer on five CMBS transactions, with a sixth appointment in process. Additionally, to boost its technology capabilities, MSUS purchased an asset management application designed for CMBS special servicing and surveillance.

DBRS Morningstar acknowledges MSUS’ sound procedures, expanded staffing, and enhanced technology capabilities for CMBS special servicing. However, DBRS Morningstar also must consider that MSUS only recently established its team and became a named special servicer, has not yet resolved any of the active assets, and before these engagements, had negligible formal special servicing activity. DBRS Morningstar does expect MSUS to serve effectively for these and future transactions and will continue to monitor its progress.

As of September 30, 2021, MSUS’ servicing portfolio consisted of 286 loan positions with an aggregate unpaid principal balance (UPB) of approximately $10.58 billion. While principally servicing for seven balance-sheet clients (up from five clients as of June 2020), MSUS’ portfolio included 42 syndicated loan positions involving 25 other lenders.

As of September 30, 2021, MSUS’ special servicing portfolio contained six CMBS loans (based on consolidated note positions) and two real estate owned properties with a combined $501.1 million UPB. To date, the Company’s asset resolution activity consists of a mezzanine loan, which it managed and liquidated during 2020 in consultation with one of its lender clients.

All rankings are subject to surveillance, which could result in rankings being raised, lowered, placed under review, confirmed, or discontinued by DBRS Morningstar.

DBRS Morningstar North American commercial mortgage servicer rankings are not credit ratings. Instead, they are designed to evaluate the quality of the parties that service commercial mortgage loans. Although the servicer’s financial condition contributes to the applicable ranking, its relative importance is such that a servicer’s ranking should never be considered as a proxy of its creditworthiness.

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

The principal methodology is North American Commercial Mortgage Servicer Rankings (September 3, 2021), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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