DBRS Morningstar Confirms Berkadia Commercial Mortgage Servicer Rankings

DBRS, Inc. (DBRS Morningstar) confirmed its MOR CS1 commercial mortgage primary servicer ranking, MOR CS2 commercial mortgage master servicer ranking, and MOR CS3 commercial mortgage special servicer ranking for Berkadia Commercial Mortgage, LLC (Berkadia or the Company). The trends for all three rankings remain Stable.

DBRS Morningstar confirmed Berkadia’s primary servicer ranking based on the Company’s strong professional depth, effective leveraging of its well-established and well-integrated offshore operations, extensive internal audit regimen, diligent portfolio management practices covering a large and complex portfolio, and proactive borrower-centric loan administration. Aside from Berkadia’s lengthy and accomplished record as a servicer for commercial mortgage-backed securities (CMBS) transactions, the Company also demonstrates high proficiency servicing single-family rental (SFR) loans and related securitizations, a business line that has grown year over year since it launched in early 2020.

Berkadia’s excellent technology encompasses a suite of well-integrated purchased and proprietary applications, robotic and machine-learning components, and a comprehensive data security program. During the past year, the Company has continued to roll out automation and content enhancements to further advance its strong capabilities, including comprehensive workflow management, portfolio surveillance, and real estate market analysis. The platform also incorporates robust borrower and client portals for effective reporting and information exchange.

While the master servicer ranking acknowledges Berkadia’s expertise and successful performance record with CMBS trustee reporting and advancing, it also considers the Company’s modest portfolio activity involving CMBS loans with subservicers. However, Berkadia’s subservicer tracking and auditing procedures continue to be sound and commensurate with its level of required oversight. Berkadia also master services a large and growing loan portfolio involving correspondent servicers for insurance company clients.

The special servicer ranking considers Berkadia’s operational scale and portfolio volume, which has remained generally modest over the past few years. Nonetheless, the Company maintains effective control practices and solid investor reporting capabilities, and has been resolving loans expeditiously. The core workout team consists of a highly experienced senior vice president, who also oversees portfolio surveillance, and two other highly experienced asset managers. In addition to handling CMBS and other loan transfers, the group handles default management for government-sponsored enterprise (GSE) and balance sheet loans.

As of June 30, 2022, Berkadia’s total primary and master servicing portfolio consisted of 20,892 loans with an aggregate unpaid principal balance (UPB) of $377.22 billion. Within this total, Berkadia was the primary or primary/master-combined servicer for 819 CMBS loans, 2,257 Fannie Mae loans, and 3,380 Freddie Mac loans, including 2,849 loans contained in Freddie Mac-sponsored securitized transactions. The Company was also the servicer on 806 SFR loans with a total UPB of $3.36 billion, the majority of which were in securitizations. The CMBS master servicer-only portfolio contained 25 loans with a UPB of $120.3 million involving four subservicers, of which one serviced 22 loans and the others serviced one loan each for Berkadia. By comparison, at year-end 2021, Berkadia’s total servicing portfolio contained 20,122 loans with an aggregate UPB of $337.20 billion.

As of June 30, 2022, Berkadia was the named special servicer on nine securitizations consisting of 216 loans with a UPB of $3.98 billion. The active portfolio contained 27 loans (including one loan in forbearance) with a total UPB of $305.2 million consisting primarily of GSE healthcare and multifamily loans.

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 (September 8, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

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

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