DBRS Morningstar assigns MOR CS1 Commercial Mortgage Special Servicer rating to LNR Partners, LLC

DBRS, Inc. (DBRS Morningstar) assigned a special MOR CS1 Commercial Mortgage Manager ranking to NRL Partners, LLC (NRL or the Company).

The ranking trend is Stable.

LNR is a wholly owned subsidiary of Starwood Property Trust, Inc.which is a subsidiary of a private equity investment firm Starwood Capital Group Global, LP

The assigned ranking reflects the following considerations:

LNR’s decades-long experience as an accomplished asset manager and special duty agent for commercial mortgage-backed securities (CMBS) transactions. The Company also has strong asset experience in secured loan obligation (CLO) transactions. DBRS Morningstar also recognizes NRL’s success since the onset of the coronavirus disease (COVID-19) pandemic in resolving a high volume of distressed loans, many of which are being processed as non-transfer consent requests. in collaboration with main repairers.

The company’s solid professional depth of highly experienced managers and employees, many of whom have exceptionally long tenures with the company. Despite the difficult labor market for employers, NRL has experienced relatively moderate turnover over the past two years. Internal redeployments of managers and staff to and from special asset management roles during the pandemic accounted for much of this turnover. The Company also shows reasonable workload ratios for asset managers, especially as the volume of the portfolio has decreased over the past year.

A well-designed organizational structure that covers all essential functions, including teams for borrower consent applications, monitoring, loan administration support, asset accounting and investor reporting. The operation includes dedicated in-house legal and compliance staff as well as an asset management team specifically for hotel assets.

The company’s comprehensive and proactive procedures, which reflect its deep expertise in CMBS transactional compliance and its understanding of best practices.

LNR’s excellent computing environment, mainly cloud-based. The technology suite includes a proprietary asset management application integrated with a purchased and customized workflow tracking application and data repository/business analytics tools, which collectively provide in-depth data management and scheduled mechanisms to monitor loan level and compliance with pooling and service agreements. Data backup, security, and recovery protocols are robust and based on recent audits and assessments, routine testing, and upgraded software. LNR also has strict data security requirements for its suppliers.

Strong CMBS-centric audit and compliance practices, which include comprehensive annual operational audits, AB rules certificates and formal procedures for the qualification and monitoring of suppliers. LNR also regularly audits property managers for real estate assets (REO).

Of the June 30, 2022LNR was the named special duty officer on 166 CMBS transactions containing 5,884 loans with a total outstanding principal balance (UPB) of $98.74 billion. He was also the special repairman on nine Freddie Mac– sponsored securitisations (four series K transactions and five low value transactions) containing 631 loans with a total UPB of $5.90 billion. Additionally, LNR was the special servicer on seven CLO transactions containing 127 loans with a total UPB of $3.80 billion. It was affiliated with the controlling holder (CCH) in 24% of these CMBS and CLO transactions. However, LNR holds minority B-coin investments in numerous CMBS transactions with third-party CCHs in which it is the named special provider.

Of the June 30, 2022the total active special services portfolio (all in securitized transactions) contained 134 loan positions and 188 REO assets (101 consolidated by asset relationships) with a combined UPB of $6.10 billion. Since the creation of LNR in 1993 until June 30, 2022the Company resolved 7,133 specially managed assets with a total UPB of approximately $86.20 billionincluding 418 specially equipped assets with a cumulative UPB of $8.10 billion resolved since early 2020.

All ratings are subject to monitoring, which may result in ratings being increased, decreased, revised, confirmed or discontinued by DBRS Morningstar.

DBRS Morningstar North American Commercial Mortgage Manager Ratings are not credit ratings. Instead, they are designed to assess the quality of the parties that service commercial mortgages. Although the financial condition of the Servicer Agent contributes to the applicable rating, its relative importance is such that a Servicer’s rating should never be considered an indicator of its creditworthiness.

Remarks:

All figures are in WE dollars unless otherwise specified.

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

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

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