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 the following factors:

-- KeyBank’s strong leadership team and professional depth. Employee turnover over the past year has decreased to within historical industry norms, and KeyBank has expanded its staff to maintain reasonable workload levels. Additionally, the Company has proved its ability to seamlessly handle some manager retirements through well-developed succession planning that maintains operational stability and continuity.
-- A well-designed organizational structure that effectively addresses the demands of a large and complex portfolio.
-- Thorough and sound asset administration for commercial mortgage-backed securities (CMBS) transactions, government-sponsored enterprises (GSEs), and a range of institutional investor clients.
-- The Company’s expertise and capabilities to address servicing agreement compliance, complex cash management, and a high volume of credit-related consent requests.
-- High timeliness and accuracy rates year over year for investor reporting and remitting.
-- Expertise in CMBS master servicer advancing and comprehensive subservicer oversight and auditing practices.
-- An integrated and robust technology platform for servicing and special servicing. The Company continues to enhance its proprietary borrower and investor portals and asset management/workflow application. Process automation includes robotics and client-facing application interfaces.
-- A multifaceted audit and compliance regimen that encompasses annual audits from parent bank KeyCorp, System and Organization Controls 1 (Type II) reports, GSE-led reviews, Regulation AB attestations, and a risk-management/control program. Aside from a minor exception in the latest Regulation AB pertaining to specialized adjustable-rate provisions for a few non-securitized small-balance loans that KeyBank quickly remedied, all audits and reviews have had satisfactory results year over year.
-- KeyBank’s well-experienced asset managers and continuing successful performance as an adept special servicer for CMBS, GSE, and other third-party transactions. As a special servicer, the Company has controlled, efficient workflows for analytics and resolution approvals.

As of June 30, 2023, KeyBank’s total servicing portfolio contained 20,031 loans with an aggregate $457.29 billion unpaid principal balance (UPB). The total portfolio included 489 CMBS transactions and 421 Freddie Mac-sponsored securitizations. The master servicing portfolio included 28 subservicers. CMBS loans accounted for approximately 34% of the total portfolio by UPB and 22% by loan count. Freddie Mac loans were approximately 26% of the total portfolio by UPB and 33% by loan count. KeyBank also serviced 27 collateralized loan obligation (CLO) transactions containing 705 loans with a $19.91 billion UPB.

As of June 30, 2023, KeyBank was the named special servicer on 424 transactions with a total UPB of approximately $220.37 billion consisting of 13,299 loans (178 CMBS transactions, 193 Freddie Mac-sponsored securitizations, 14 CLOs, and 39 asset-backed or other whole-loan transactions). The active special servicing portfolio contained 207 assets (194 loans and 13 real estate owned properties) with a combined $4.70 billion UPB. By count, 85% of the assets were in securitized transactions.

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 (August 23, 2023; https://www.dbrsmorningstar.com/research/419592).

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

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277