DBRS Morningstar Confirms Greystone’s MOR CS1 Commercial Mortgage Servicer and Special Servicer Rankings

DBRS, Inc. (DBRS Morningstar) confirmed its MOR CS1 commercial mortgage primary and special servicer rankings for Greystone Servicing Company LLC (GSC or the Company). The trend for both rankings is Stable.

DBRS Morningstar recognizes GSC’s accreditations and accomplished record as a servicer of multifamily and healthcare portfolios for government-sponsored enterprises (GSEs), Federal Housing Administration (FHA)/Ginnie Mae, and other agencies and third-party clients. Through its acquisition of C-III Asset Management LLC (C-III) in December 2019, GSC has an extensive record as an adept special servicer for commercial mortgage-backed securities (CMBS) transactions and other institutional investors. GSC’s servicing group also has asset managers well experienced in resolving troubled GSE and FHA loans.

The confirmed primary servicer ranking further reflects:
-- GSC’s well-designed organizational structure that has product-type specialist teams to address all servicing functions. Although GSC specializes in the agency-sponsored multifamily/healthcare sector, the Company has the capabilities to soundly administer loans of other property and transaction types, including non-agency CMBS transactions.
-- GSC’s stability, based on its excellent professional depth and management team’s long average tenure. The Company experienced elevated staff turnover in 2021 as did many other servicers. However, through proactive recruitment, staff promotions, flexible workplace arrangements, and other initiatives, GSC has been meeting its resource challenges to stay ahead of portfolio growth and maintain reasonable workload ratios. The Company continues to have a strong focus on career development and employee training.
-- Thorough procedures, which denote expertise with lenders’ myriad reporting and compliance requirements, including their securitization programs. The Company demonstrates attentive borrower relationship management as well as diligent vendor oversight practices.
-- GSC’s substantial technology infrastructure and integrated suite of purchased and proprietary applications, which include a robust borrower web portal. The Company continues to roll out enhancements and build robotic processes to advance automation and compliance management. The nearly 100% cloud-based platform has sound data protection and backup practices, which include an expanded program of security assessments and testing.
-- A comprehensive regimen of internally led audits, Regulation AB attestations, and client-led examinations. A dedicated compliance function coordinates these activities and conducts supplemental audits. GSC’s technology affiliate also undergoes SOC I/Type 2 examinations. All recent audit results have been satisfactory overall.
-- GSC’s effective response to the influx of forbearance and other loan relief requests during the pandemic. It quickly implemented lenders’ procedures and automated the application process through the borrower portal.
The confirmed special servicer ranking also recognizes:
-- GSC’s well-experienced management team. The Company had some high-level departures in 2021 but continues to demonstrate solid leadership and professional depth. GSC asset managers’ average experience remains among the highest in the industry. The Company also had no staff turnover in the second half of 2021.
-- GSC’s prompt hiring of more asset managers to address the portfolio volume surge in the early months of the pandemic. With activity easing over the past year, the Company continues to maintain very reasonable workload levels.
-- GSC’s thorough analytics and controls, which include comprehensive asset resolution cases, sound approval practices, independent compliance audits, real estate owned (REO) property manager audits, and in-house legal oversight.
-- The Company’s excellent asset resolution record, which has involved many complex and recovery-challenged assets.
-- GSC’s proprietary and effective technology for CMBS-centric special servicing. While the core application may not be best in class, GSC continues to strengthen it with expanded features and automation enhancements.
As of YE2021, GSC’s total servicing portfolio consisted of 6,111 loans with an aggregate unpaid principal balance (UPB) of approximately $60.28 billion, up from 5,848 loans and a $52.104 billion UPB at YE2020 and 5,184 loans and a $42.04 billion UPB at YE2019. Approximately 95% of the portfolio by loan count was secured by multifamily-oriented assets, including healthcare, cooperative, and mobile home park properties. GSC serviced 2,187 Freddie Mac loans (92% in securitizations), 2,581 Fannie Mae loans, 947 FHA/Ginnie Mae loans, and 169 loans contained in eight collateralized loan obligation (CLO) transactions.

As of YE2021, GSC was the named special servicer on 64 CMBS transactions (17 had one remaining asset) and 14 Freddie Mac securitizations (12 small balance and two K-Series) that together consisted of 1,791 loans with an aggregate pool balance of $21.41 billion. Additionally, GSC was special servicer on 94 CLO loans involving four of the CLO transactions in which it was the primary servicer.

As of YE2021, the active special servicing portfolio had 77 assets (56 loans and 21 REO) with a total UPB of $1.85 billion. During 2021, GSC received 21 transfers (20 loans and one REO asset), down from 110 loan transfers in 2020 (including 75 loans in H1 2020). By comparison, at YE2020, the active special servicing portfolio had 137 assets (92 loans and 45 REO properties) with a UPB of $3.57 billion.

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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