Overview
- We affirmed our overall ABOVE AVERAGE rankings on Situs Asset Management LLC (SAM) and Situs Holdings LLC (SH) as a primary servicer and a special servicer, respectively.
- SAM and SH are each wholly owned subsidiaries of SitusAMC, a provider of services for commercial and residential real estate transactions, including advisory services, loan servicing, single family rentals, risk management, consulting and staffing, valuation management, and business process outsourcing.
- The outlook on each ranking is stable.
FARMERS BRANCH (S&P Global Ratings) May 27, 2021--S&P Global Ratings today affirmed its ABOVE AVERAGE ranking on Situs Asset Management LLC as a commercial mortgage loan primary servicer and Situs Holdings LLC as a commercial mortgage loan special servicer (collectively, Situs). The outlook on each ranking is stable.
Our rankings reflect Situs':
- Experienced senior management team, albeit with some notable leadership changes since our last review;
- Diversified and ongoing training plans for employees;
- Effective technology systems and extensive disaster recovery plans;
- Well-defined operational processes and established policies and procedures; and
- Solid history of special servicing loan resolutions.
Since our prior review (see "Servicer Evaluation: Situs Asset Management LLC And Situs Holdings LLC," published March 1, 2019), the following changes and developments have occurred:
- In June 2019, Situs Group Holdings Corp. acquired American Mortgage Consultants Inc. (AMC), and the merged companies became SitusAMC.
- In July 2019, following the merger, the Situs CEO left the company and was replaced by the AMC CEO, an executive with extensive industry experience.
- Funds managed by Stone Point Capital, a private equity firm sold a 34.97% ownership interest in SitusAMC to Public Sector Pension Investment Board (PSP), a large Canadian pension fund. Stone Point maintains a 49.28% ownership of SitusAMC.
- In July 2019, the Situs chief information officer (CIO) resigned and an internal candidate was promoted to the position.
- In July 2019, SitusAMC hired a new managing director/head of U.S. servicing, asset management, and special servicing, as well as a new managing director/head of client services for U.S. servicing, asset management, and special servicing. Both individuals have extensive industry experience, most recently in senior leadership positions with Cohen for 12 years.
- In March 2020, the executive managing director responsible for primary and special servicing left the company, and his duties were ultimately assumed by the two new previously mentioned managing directors along with a senior director of special servicing.
- In March 2020, SitusAMC acquired CJC Technologies, adding the CLOSER array of technology solutions to their systems platform.
- In June 2020, Situs added a highly experienced senior director who was most recently the executive vice president for another S&P Global Ratings ranked servicer, with a mandate to expand its special-servicing unit to handle the expected wave of mortgage delinquencies and defaults resulting from the pandemic.
- In September 2020, Situs acquired the third-party loan servicing and asset management platform of Cohen Financial. This strategic acquisition resulted in the addition of approximately 6,900 loans ($34 billion in unpaid principal balance [UPB]) to the portfolio and the hiring of over 120 individuals previously employed by Cohen.
- Situs executed a master services agreement with a government-sponsored enterprise (GSE) to help provide loss mitigation and REO management services for the GSE's portfolio.
- In November 2020, SitusAMC acquired rSquared CRE LLC, which provides a valuation, underwriting, and asset management software, and a budgeting and reforecasting software.
- In 2020, Situs began an initiative with each business unit performing a formal assessment of its activities to identify potential risk and their controls.
- In 2020, the company opened an additional office in Leawood, Kan., where most of the legacy Cohen employees and the new senior leadership team are based.
- In early 2021, an S&P Global Ratings ranked servicer exited the CMBS special servicing business and Situs replaced the servicer on 23 transactions that had a UPB of $14.1 billion as of year-end 2020.
- Since March 2020, most of Situs' employees have been successfully working remotely due to the COVID-19 pandemic.
The outlook on each ranking is stable. Since our last review, Situs has embarked on an aggressive growth strategy, which included the acquisition of the legacy Cohen portfolios and the transfer of a sizable amount of CMBS special servicing assignments. As of Dec. 31, 2020, the primary servicing portfolio contained 9,323 loans with a combined UPB of $131.3 billion. The special servicing portfolio contained 108 nonperforming and subperforming commercial loans, as well as four real estate-owned properties with a UPB of $2.8 billion. At the time of our last review, the primary servicing portfolio contained 1,781 loans with a UPB of $48.5 million, and the special servicing portfolio contained 24 nonperforming and subperforming commercial loans as well as five REO properties with a combined UPB of $174.1 million.
Situs has brought seasoned leadership on board to handle the growth as the company continues to enhance and update its processes, invest in technology, and maintain solid controls. At the time of our review, Situs was running two separate Enterprise! servicing systems, with the Cohen loans on one system and the legacy Situs loans on another. Management expects the two systems to merge onto a single new release of Enterprise! by year-end 2021. Although we note that operational challenges could arise with merging both loan portfolios onto a single SitusAMC system, we also believe, given the strength of the new leadership team, that this will be accomplished with limited issues.
The financial position is SUFFICIENT.
Related Research
- Select Servicer List, April 2, 2021
- Environmental, Social, And Governance Factors Have Consistently Powered Our Servicer Evaluation Rankings, Nov. 16, 2020
- Servicer Evaluation Spotlight Report™: U.S. Commercial Mortgage Servicers Preparing For Impact From COVID-19, April 3, 2020
- Servicer Evaluation: Situs Asset Management LLC And Situs Holdings LLC, March 1, 2019
- Analytical Approach: Global Servicer Evaluations Rankings, Jan. 7, 2019
This report does not constitute a rating action.
| Servicer Analyst: | Marilyn D Cline, Farmers Branch + 1 (972) 367 3339; marilyn.cline@spglobal.com |
| Secondary Contact: | Geoffrey C Danek, Centennial + 1 (303) 721 4689; Geoffrey.Danek@spglobal.com |
| Analytical Manager, Servicer Evaluations: | Robert J Radziul, New York + 1 (212) 438 1051; robert.radziul@spglobal.com |
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