Morningstar DBRS Confirms Commercial Mortgage Special Servicer Ranking for Argentic Services Company LP

DBRS, Inc. (Morningstar DBRS) confirmed its MOR CS2 commercial mortgage special servicer ranking for Argentic Services Company LP (ASC or the Company). The trend for the ranking remains Stable. ASC, which launched its operations in early 2020, is an affiliate of Argentic Investment Management LLC (AIM) and funds managed by AIM. Funds managed by Elliott Investment Management L.P. control ASC’s general partner, ASC GP LLC. The confirmed special servicer ranking reflects:

-- ASC’s continued ability to successfully manage its special servicing portfolio, which includes complex commercial mortgage-backed securities (CMBS) and commercial real estate collateralized loan obligation (CLO) transactions.

-- An effective operating structure that incorporates all essential functions, including support from AIM for shared corporate-level resources.

-- A highly experienced and tenured senior management team, which includes a skilled asset management staff that has a strong background in special servicing requirements and best practices for CMBS. ASC’s employee turnover has decreased to a moderate level over the past year. To address increasing portfolio activity because of new assignments and loan transfers, ASC has been adding personnel to maintain reasonable workload levels.

-- The Company’s proactive and controlled loan transfer and resolution management processes. ASC also demonstrates strong practices for portfolio surveillance, handling borrower consents, and delivering CMBS-centric investor reporting content.

-- An effective cloud-based computing environment that centers on a third-party-purchased application for asset management and special servicing with robust asset tracking, investor reporting, and workflow functionality geared to CMBS requirements. Through vendor agreements, ASC has sound protocols for data security, data backup, and testing.

-- Focused audit and CMBS-centric compliance practices that include an annual comprehensive operational audit, Regulation AB attestations, a formalized vendor oversight program, and real estate owned (REO) property manager audits. ASC continues to effectively use and enhance its application for monthly compliance tracking to further support its efforts to ensure timeliness, accuracy, and tight controls.

As of December 31, 2023, ASC was a named special servicer on 56 securitized transactions totaling $31.5 billion in unpaid principal balance (UPB), which includes six CLO transactions totaling $3.71 billion in UPB.

As of December 31, 2023, the active special servicing portfolio contained 28 assets (24 loan positions and four REO assets, with a combined UPB of approximately $852.0 million up from 23 assets with a UPB of $745.5 million a year earlier. ASC received its first asset transfers in May 2020. Since that time through December 2023, it has resolved 95 loans and sold 18 REO assets.

All rankings are subject to surveillance, which could result in rankings being raised, lowered, placed under review, confirmed, or discontinued by Morningstar DBRS.

Morningstar DBRS 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://dbrs.morningstar.com/research/419592.

For more information on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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