Overview
- Argentic Services Co. L.P. (ASC) is a commercial mortgage loan special servicer located in Plano, Texas, that commenced operations in August 2019.
- ASC is an affiliate of Elliott Investment Management L.P. and Argentic Investment Management LLC, which is an active participant in the commercial mortgage-backed securities and commercial real estate collateralized loan obligation markets.
- We affirmed our overall AVERAGE ranking on ASC as a commercial mortgage loan special servicer.
- The ranking outlook is stable.
CENTENNIAL (S&P Global Ratings) Aug. 27, 2021--S&P Global Ratings today affirmed its AVERAGE ranking on Argentic Services Co. L.P. (ASC) as a commercial mortgage loan special servicer. The ranking outlook is stable.
Our ranking reflects ASC's:
- Experienced senior managers, including several who previously held leadership positions at other S&P Global Ratings' ranked commercial mortgage loan special servicers;
- Active participation in the commercial mortgage-backed securities (CMBS) market as a B-piece buyer through an affiliate entity managed by Argentic Investment Management LLC (AIM);
- Limited operating history as a newer venture;
- Formal training program that supplements on-the-job training;
- Good leverage of a third-party asset management and special servicing system;
- Internal control environment built on a solid framework; and
- Limited track record of loan resolutions and real estate-owned (REO) sales given its short history.
ASC is owned and controlled by its general partner through funds managed by Elliott Investment Management L.P. (together with its affiliates, "Elliott"). ASC operates as an affiliate of Elliott and AIM, which is an investment manager to active participants in the CMBS and commercial real estate collateralized loan obligation (CRE-CLO) markets, both as a lender and as a buyer of B-pieces.
Since our prior review (see "Servicer Evaluation: Argentic Services Co. L.P.," published May 21, 2020), the following changes and/or developments have occurred:
- ASC was named special servicer on 29 CMBS transactions totaling $18.9 billion in unpaid principal balance (UPB), and two CRE-CLO transactions totaling $1.3 billion in UPB.
- The company's active special servicing portfolio grew to 41 loans with a UPB of $1.1 billion and six real estate-owned (REO) assets with a UPB of $64.9 million as of June 30, 2021, compared with no active portfolio at our initial review.
- From May 2020 through June 2021, ASC resolved 45 loans with an aggregate UPB of $717.1 million, including 39 loans with a UPB of $613.9 million that were returned to the master servicer following a modification and/or forbearance agreement.
- From May 2020 through June 2021, ASC processed 209 borrower requests, primarily lease consents, approval to permit financing under the Paycheck Protection Program, forbearance, or other relief due to property distress as a result of the COVID-19 pandemic.
- Due to portfolio growth and further buildout of their infrastructure, ASC increased its overall staffing by 16, and now has 20 employees.
- The company's initial director of asset management, who had over 30 years of industry experience, voluntarily departed in September 2020 to return to his prior employer.
- A new director of asset management, with over 26 years of industry experience, was hired in September 2020 to replace the aforementioned employee.
- ASC expanded its office space by 2,449 square feet to 5,149 square feet, which accommodates an additional 17 workspaces in a socially distant layout.
- The company implemented its business continuity plan in March 2020 due to the COVID-19 pandemic, and all employees began working remotely with reportedly no disruptions or delays in daily operations. Staff began returning to the office in May 2021.
The ranking outlook is stable. ASC has built the infrastructure to be a capable commercial mortgage loan special servicer. Although ASC is a relatively new entity with a limited track record, given the servicer's affiliation with Elliott and AIM, an investment manager to active participants in the CMBS B-piece and CLO markets, accompanied by management's extensive special servicing experience gained at other organizations, we expect it will be an effective special servicer. Additionally, we expect ASC will maintain the people, processes, and technology needed to operate in a manner consistent with industry standards.
The financial position is SUFFICIENT.
Related Research
- Select Servicer List, June 3, 2021
- Environmental, Social, And Governance Factors Have Consistently Powered Our Servicer Evaluation Rankings, Nov. 16, 2020
- Analytical Approach: Global Servicer Evaluations Rankings, Jan. 7, 2019
This report does not constitute a rating action.
| Servicer Analyst: | Geoffrey C Danek, Centennial + 1 (303) 721 4689; Geoffrey.Danek@spglobal.com |
| Secondary Contact: | Marilyn D Cline, Farmers Branch + 1 (972) 367 3339; marilyn.cline@spglobal.com |
| Analytical Manager, Servicer Evaluations: | Robert J Radziul, New York + 1 (212) 438 1051; robert.radziul@spglobal.com |
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