Press Release

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

CMBS
April 24, 2025

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 considers the following:

-- ASC's time in business but steadily growing achievement record resolving assets in commercial mortgage-backed securities (CMBS) and commercial real estate collateralized loan obligation (CRE CLO) transactions involving complex loan structures and various property types across the United States.

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

-- ASC's highly experienced senior management team. The Company has a bit more key-person risk compared with some larger-scale special servicers. However, professional depth has broadened as a result of staff additions for asset management and borrower consents. The net effect of hiring combined with some employee departures has reduced asset managers' average industry experience, but it remains solid. Employee turnover, albeit slightly higher in 2024, has been moderate overall, and ASC had no manager-level turnover in 2024. Although ACS's active portfolio has been increasing, the Company's hiring efforts have enabled it to maintain reasonable workload levels.

-- The Company's robust training function, especially for its still-modest size by headcount. The average training hours per employee is also high.

-- ASC's policies and procedures, which indicate very controlled and diligent CMBS-centric asset management and resolution practices. ASC also demonstrates thorough practices for portfolio surveillance, vendor oversight, and investor reporting. The senior management team is quite experienced with servicing agreement requirements and CMBS-related issues and nuances.
-- An effective cloud-based computing environment that centers on a third-party-purchased application for asset management and special servicing that provides robust asset tracking, reporting, and workflow functionality geared to CMBS requirements. Through vendor agreements, ASC has well-designed protocols for data security, data backup, and testing.

-- ASC's strong compliance-oriented culture and solid audit regimen that includes annual comprehensive operational audits, Regulation AB attestations, a formalized vendor oversight program, and real estate owned (REO) property manager audits. All audits of ASC to date have been satisfactory and clear of any material exceptions.

As of December 31, 2024, ASC was a named special servicer on 1,914 loans with an unpaid principal balance (UPB) of $38.16 billion involving 61 CMBS transactions (approximately 153 total transactions when including companion loan assignments) and five CRE CLO transactions. The Company was affiliated with the first-loss bond position investor class in about 84% of the loans in which it was the named special servicer.

As of YE2024, the active special servicing portfolio contained 39 assets (30 loan positions and nine REO properties) with a combined UPB of approximately $1.57 billion. By comparison, as of YE2023, the active special servicing portfolio contained 28 assets (24 loan positions and four REO properties) with a combined UPB of approximately $852.0 million.

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.

DBRS, Inc.
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