Overview
- BREF Partners Special Servicer LLC performs special servicing for its affiliate, Brookfield Real Estate Financial Partners LLC, which in turn manages subordinate debt funds for sovereign entity and large institutional investors, including Brookfield Asset Management Inc., its parent holding company.
- We affirmed our overall AVERAGE ranking on BREF Partners Special Servicer LLC as a commercial mortgage loan special servicer.
- The ranking outlook is stable.
NEW YORK (S&P Global Ratings) Aug. 30, 2021--S&P Global Ratings today affirmed its AVERAGE ranking on BREF Partners Special Servicer LLC (BPSS) as a commercial mortgage loan special servicer. The ranking outlook is stable.
Our ranking reflects BPSS':
- Capacity to operate as an effective special servicer, particularly for larger, complex commercial mortgage loans;
- Institutional backing and infrastructure support from its parent company, Brookfield Asset Management Inc. (BAM), a global alternative asset manager;
- Experienced and tenured senior management and asset management staff;
- Internal control environment that includes thorough, albeit infrequently updated, policies and procedures as well as a lack of an audit program to test their effectiveness;
- Sound technology systems to manage its investment funds, but lack of a dedicated special servicing system;
- Limited training program, which is not unusual given the small role that special servicing plays in the organization's business plan; and
- Lack of both an active special servicing portfolio and a recent track record of special servicing loan resolutions.
Since our prior review (see "Servicer Evaluation: Brookfield Real Estate Financial Partners LLC," published Jan. 10, 2020), the following changes and/or developments have occurred:
- In the first quarter of 2020, Brookfield Real Estate Financial Partners LLC (BREF) created a new affiliate, BPSS, and we reassigned our special servicing ranking to this entity. BPSS has the same special servicing resources that BREF had when it previously was the ranked special servicer, and the two entities share the same personnel.
- In response to the distress caused by the COVID-19 pandemic, BPSS appointed itself as the named special servicer on four single-asset/single-borrower transactions in 2020. None of the loans in these transactions have been transferred to special servicing. BPSS has, however, reviewed and approved borrower consents for two commercial mortgage-backed securities transactions in this role.
- BREF started fundraising for its sixth closed-end real estate fund, BREF VI, which is expected to close by year-end 2021 with a fundraising target between $3.5 and $4.0 billion.
- BPSS' headcount increased by 24% from Dec. 31, 2020, to June 30, 2021, primarily due to a high level of current and anticipated origination volume.
- The company implemented its business continuity plan in March 2020 due to the COVID-19 pandemic with all employees initially working remotely, with reportedly no disruptions or delays in daily operations. The BPPS team resumed working from the office during the summer of 2020 with COVID-19 safety protocols in place.
The ranking outlook is stable. We expect that BPSS will maintain the systems, people, and processes required to administer a small portfolio of specially serviced loans in accordance with generally accepted servicing practices. Its experienced management team and strong real estate platform should enable it to be an effective special servicer when necessary.
The financial position is SUFFICIENT.
Related Research
- Brookfield Asset Management Inc., July 20, 2021
- Select Servicer List, June 3, 2021
- Servicer Evaluation: Brookfield Real Estate Financial Partners LLC, Jan. 10, 2020
- Servicer Evaluation Spotlight Report™: 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
- Analytical Approach: Global Servicer Evaluations Rankings, Jan. 7, 2019
This report does not constitute a rating action.
| Servicer Analyst: | Paul L Kirby, New York + 1 (212) 438 1365; paul.kirby@spglobal.com |
| Secondary Contact: | Steven Altman, New York + 1 (212) 438 5042; steven.altman@spglobal.com |
| Analytical Manager, Servicer Evaluations: | Robert J Radziul, New York + 1 (212) 438 1051; robert.radziul@spglobal.com |
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