Morningstar DBRS Confirms Commercial Mortgage Servicer Rankings for Greystone Servicing Company LLC

DBRS, Inc. (Morningstar DBRS) confirmed its MOR CS1 commercial mortgage primary and special servicer rankings and its MOR CS3 commercial mortgage master servicer ranking for Greystone Servicing Company LLC (GSC or the Company). 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.
-- A well-designed organizational structure that features product-type specialist teams. Although GSC's honed niche is in the agency-sponsored multifamily/healthcare sector, it has demonstrated the requisite capabilities to effectively service loans of other property and transaction types, including non-agency commercial mortgage-backed securities (CMBS). The Company noted that its workload ratios, which are reasonable, have decreased in recent years largely because of clients' increasing compliance requirements and increasing property counts.
-- GSC's strong professional depth, managers' high average tenure, and moderate employee turnover rates. GSC displays a strong focus on career development and a robust employee training function. To ensure operational continuity, the Company has a well-developed succession plan for each department.
-- Thorough procedures that denote expertise with lenders' myriad reporting and compliance requirements, including their securitization programs.
-- GSC's diligent and controlled vendor oversight. The Company does not have offshore staff but does oversee vendors with offshore operations. During the past year, the Company fully transitioned all financial statement spreading for the GSEs to vendors, and plans to expand their scope of work to support other servicing processes. Accordingly, GSC has slowed its hiring to allow for the transitioning of more work to vendors.
-- GSC's substantial technology capabilities, which center on an integrated suite of purchased and proprietary applications, along with a robust borrower portal. The Company recently released an investor portal and continues to roll out other automation enhancements. Its sound data protection and redundancy protocols include recurring security assessments and testing.
-- A solid regimen of internally led audits, Regulation AB attestations, and 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 satisfactory overall 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 high. Asset managers in the primary servicing group also have experience in resolving troubled GSE and FHA loans. Employee turnover has been moderate and decreased in 2024.
-- 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 companies) 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 confirmed master servicer ranking considers:
-- GSC's one-year history and modest portfolio volume in this role, which cumulatively and currently involves two securitized multifamily loan transactions.
--- The Company's adequate procedures for advancing and determining recoverability. To prepare for its first master servicing assignment, GSC enhanced its servicing system to assist with monitoring advances. GSC has some experience advancing on FHA-backed loans as well.
-- GSC's acceptable subservicer oversight procedures; it has not managed any CMBS subservicers, but did manage one servicer that involved one non-securitized loan during most of 2024.
-- The Company's reporting and remitting experience as an FHA servicer, as a servicer for commercial real estate collateralized loan obligation (CRE CLO) transactions, and as a subservicer for GSE-sponsored securitizations, which indicates that it has the capability to serve as a competent CMBS master servicer.

As of December 31, 2024, GSC's total servicing portfolio consisted of 6,660 loans with an aggregate unpaid principal balance (UPB) of approximately $75.83 billion, up from 6,372 loans and a UPB of $70.38 billion as of YE2023. Included in the YE2024 total were two primary/master-combined CMBS transactions containing 31 multifamily loans with an aggregate $600.8 million UPB. GSC also serves as special servicer for both transactions. It had no subservicers as of YE2024.

As of YE2024, by loan count, approximately 96.1% of the total servicing portfolio was secured by multifamily-oriented assets, including healthcare, co-operative, and mobile home park properties. By loan count, approximately 37% of the portfolio involved Freddie Mac-sponsored loans (86% of those were in 329 securitizations), 41% were Fannie Mae loans, 16% were FHA/Ginnie Mae/USDA loans, and 1% were contained in eight CRE CLO transactions (three were GSC-issued). Less than 1% of the servicing portfolio involved non-agency CMBS.

As of YE2024, GSC was the named special servicer on 47 CMBS transactions and 24 Freddie Mac securitizations (12 small balance and nine K-Series) that together had 2,251 loans with an approximate UPB of $28.36 billion. Additionally, GSC was special servicer on 62 CRE CLO loans involving the same three CRE CLO transactions in which it was primary servicer. The Company was affiliated with the controlling bondholder class in about 12% of these total transactions, down from 18% at YE2023. As of YE2024, the active special servicing portfolio contained 79 securitized assets (50 loans and 29 REO properties) with a total UPB of $1.73 billion.

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, 2024) https://dbrs.morningstar.com/research/438283.

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

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