Morningstar DBRS Confirms Greystone’s Commercial Mortgage Primary and Special Servicer Rankings; Assigns Commercial Mortgage Master Servicer Ranking

DBRS, Inc. (Morningstar DBRS) confirmed its MOR CS1 commercial mortgage primary and special servicer rankings for Greystone Servicing Company LLC (GSC or the Company). Morningstar DBRS also assigned its MOR CS3 commercial mortgage master servicer ranking to GSC. The trend for all rankings is Stable.

The confirmed primary servicer ranking reflects:
-- GSC’s accreditations and accomplished record as a servicer of multifamily and healthcare portfolios for government-sponsored enterprises (GSEs), the Federal Housing Administration (FHA)/Ginnie Mae, and other agencies and third-party clients.
-- GSC’s well-designed organizational structure that features product-type specialist teams. Although GSC’s honed niche is in the agency-sponsored multifamily/healthcare sector, the Company demonstrates the requisite capabilities to service loans of other property and transaction types, including non-agency commercial mortgage-backed securities (CMBS).
-- GSC’s stability based on its excellent professional depth, managers’ high average tenure, and relative low employee turnover rates since mid-2022. Workload ratios are reasonable and have decreased slightly over the past few years. GSC continues to display a strong focus on career development and training.
-- Thorough procedures that denote expertise with lenders’ myriad reporting and compliance requirements, including their securitization programs. The Company demonstrates attentive borrower relationship management and diligent vendor oversight.
-- GSC’s substantial technology capabilities, which center on an integrated suite of purchased and proprietary applications, along with a robust borrower portal. The Company continues to roll out enhancements to advance automation and compliance management. Data protection and redundancy protocols include recurring security assessments and testing.
-- A solid regimen of internally led audits, Regulation AB attestations, and various agency and other client-led examinations. GSC’s technology platform also undergoes System and Organization Controls 1/Type II examinations. Over the past several years, the collective audit results have been overall satisfactory and contained very few exceptions.

The confirmed special servicer ranking recognizes:
-- GSC’s effective operating structure and well-experienced management. Asset managers’ average experience remains among the highest in the industry. Asset managers in the primary servicing group also are experienced in resolving troubled GSE and FHA loans.
-- The Company’s moderating employee turnover over the past two years. To offset departures and maintain reasonable workload levels, GSC has hired some well-experienced personnel as well.
-- Thorough analytics and control practices, independent compliance audits, real estate owned (REO) property manager audits, and in-house legal oversight.
-- The Company’s lengthy and excellent asset resolution record (including that of its predecessor, C-III Asset Management LLC) that has involved many complex and recovery-challenged assets.
-- An effective CMBS-centric suite of technology applications that includes a revamped surveillance module. The Company continues to add automation enhancements and other features.

The assigned master servicer ranking considers that GSC began serving in this role only in March 2024. However, the Company has adequate procedures for advancing and stated that it is enhancing its master servicer procedures to better document its control practices for recoverability determinations. GSC also has some experience advancing on FHA-backed loans. Although the Company does not oversee subservicers, it has developed acceptable oversight procedures. GSC’s reporting and remitting experience as a primary servicer, including its ability to produce Commercial Real Estate Finance Council-compliant reports, as well as its diligent surveillance practices, indicate that it should solidly handle its corresponding CMBS master servicer duties.

As of December 31, 2023, GSC’s primary servicing portfolio consisted of 6,372 loans with an aggregate unpaid principal balance (UPB) of approximately $70.38 billion. Approximately 95.6% of the portfolio by loan count was secured by multifamily-oriented assets, including healthcare, co-operative, and mobile home park properties.

As of YE2023, GSC was the named special servicer on 68 securitizations, including 15 Freddie Mac-sponsored and three commercial real estate collateralized loan obligation transactions, that together had 2,047 loans with an approximate UPB of $27.55 billion. The active special servicing portfolio contained 33 securitized assets (25 loans and eight REO properties) with a total UPB of $969.2 million.

GSC’s master-serviced portfolio consists of one securitization secured by state and municipal certificates collateralized by 20 performing multifamily loans with an aggregate UPB of $235.8 million at issuance. GSC also serves as the special servicer for the transaction. The Company expects any additional master servicing assignments to principally involve multifamily loans.

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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