DBRS Morningstar Confirms KeyBank’s Commercial Mortgage Servicer Rankings

DBRS, Inc. (DBRS Morningstar) confirmed its MOR CS1 commercial mortgage primary servicer, master servicer, and special servicer rankings for KeyBank, N.A. (KeyBank or the Company), a wholly owned subsidiary of KeyCorp. The trends for all rankings are Stable.

The confirmed rankings reflect KeyBank’s highly experienced management team, strong professional depth, and well-designed, stable organizational structure to address its many duties for a large and complex portfolio. As with most other servicers, KeyBank has been challenged with elevated employee turnover, which was especially acute during 2021. However, through aggressive hiring efforts, the Company successfully refortified its ranks to maintain reasonable workload levels. Additionally, its turnover rate for H1 2022 was much lower and within historical norms for the industry.

As a primary and master servicer, KeyBank has well-delineated procedures for effective asset administration for commercial mortgage-backed securities (CMBS) transactions, government-sponsored enterprises (GSEs), and institutional investor clients. It continues to be an adept master servicer with expertise in servicing agreement compliance, complex cash management, and advancing. The Company’s investor reporting and remitting timeliness and accuracy rates also have been high year over year. Subservicer oversight and auditing practices are comprehensive.

KeyBank’s integrated technology is a core strength for servicing and special servicing. The Company continues to enhance its robust borrower and client portals and asset management/workflow application, refine robotic processes, add client application interfaces, and devote resources to data security.

The Company’s multifaceted audit regimen includes Regulation AB attestations, annual audits from parent bank KeyCorp, Service Organization Control 1 (Type II) reports, GSE-led reviews, and an independent risk-management/control program. All audits and reviews have consistently had satisfactory results.

As a special servicer, KeyBank has well-experienced asset managers. During the past 18 months, it extended its lengthy and successful asset resolution record for CMBS transactions and other investors. The Company has controlled, efficient workflows for analytics and resolution approvals. Its oversight of real estate owned (REO) properties includes property manager audits as an industry best practice.

As of June 30, 2022, KeyBank’s total primary and master servicing portfolio contained 20,402 loans with an aggregate $437.86 billion unpaid principal balance (UPB). It was the primary and/or master servicer on 496 CMBS transactions and the primary and/or master servicer on another 410 Freddie Mac-sponsored securitizations. The master servicing portfolio included 36 subservicers. CMBS loans accounted for 35.8 % of the total portfolio by UPB and 22.4% by loan count. Freddie Mac loans (including nonsecuritized) accounted for 27.5% of the total portfolio by UPB and 32.5% by loan count. KeyBank also was the servicer for 22 collateralized loan obligation (CLO) transactions with a combined 638 loans and $17.15 billion UPB.

As of June 30, 2022, KeyBank was the named special servicer on 389 transactions with a total UPB of approximately $204.0 billion consisting of 13,314 loans (158 CMBS transactions, 177 Freddie Mac-sponsored securitizations, 11 CLOs, 17 asset-backed transactions, and 26 other/whole-loan pools).

Its active special servicing portfolio contained 99 assets (84 loans and 15 REO properties) with a combined $1.59 billion UPB. The CMBS component consisted of 69 assets (59 loans and 10 REO properties) with a combined $1.56 billion UPB. By comparison, as of YE2020, the total active special servicing portfolio contained 214 assets (208 loans and six REO properties) with a combined $3.64 billion UPB.

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 8, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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