Situs Asset Management, a subsidiary of Situs Europe, has finally completed the protracted purchase of Deutsche Bank’s European CMBS loan servicing platform DECO, triggering the transfer of 83 securitised loans with an outstanding balance of more than €6bn.
This Monday afternoon’s transfer of the DECO transactions brings to a conclusion a near year-long ambition of Situs Europe to strenghen its loan servicing market postion, following the acquisition of it parent company, The Situs Companies, in October 2011 by Helios AMC.
Helios AMC is owned in a joint venture between Ranieri Partners and Deutsche Bank.
Situs’ transfer of Deutsche Bank’s European CMBS transactions comes in two parts: 12 deals on a sub-servicing basis and a further four in a full master servicing transfer.
Moody’s estimates that the 83 CMBS loans are secured by a pool of commercial and multi-family residential properties across the UK and Continental Europe, with a concentration in Germany and the Netherlands, with an outstanding balance of €5.8bn.
But the true figure is thought to be higher still as this figure only reflects the number and value of loans which Moody’s measures. Moody’s, for example, did not rate either of Deutsche Bank’s two post-global financial crisis CMBS transactions, which suggests the number is of loans is at least 85 and the aggregate loan balance is around €6.3bn.
Situs established a European arm in 2004, and currently services 435 commercial property loans with an outstanding balance of €3.7bn through its Copenhagen and Frankfurt offices.
Therefore, the integration of Deutsche Bank loans takes the tally of aggregate loans under servicing to 518 loans with a total outstanding balance of near €10bn.
Deutsche Bank’s Dan Boakes, head of loan servicing, will work within Situs along with his six-strong team.
CoStar News understands that Situs and Deutsche Bank had originally tried to complete the sale of all European CMBS loans on a full master transfer, but negotiations with ratings agency Moody’s prevented this.
For the dozen sub-servicing transaction transfers, Deutsche Bank will remain liable for any right of the issuer that may arise as a result of any failure of the sub-servicer to perform its duties, explained Moody’s.
Deutsche Bank, therefore, reputationally and legally remains liable for these loans, preventing a clean exit by the investment bank in European commercial property loan servicing.
Moody’s explained: “As per the servicing agreement, Deutsche Bank is obliged to monitor the performance and enforce the obligations of the sub-servicer under its sub-servicing agreement.”
Deutsche Bank’s servicing team will continue to be involved in servicing the loans, in particular in respect of the debt service payment collections and the reporting of such to the transaction parties.
The ratings agency added: “Moody’s has reviewed various aspects of Situs’ servicing platform including (i) management and organisational set up; (ii) staffing levels and procedures; (iii) servicing know how and experience; and (iv) reporting tools and procedures. Moody’s considers these to be sufficiently well developed to enable the company to provide the sub-servicing function for the affected transactions.”
Among the four full master service transfers, were Chiswick Park and Merry Hill securitisations – both unrated by Moody’s, which implies the total value of the €5.8bn outstanding loan balance transferred could be higher.
Situs will take over all other functions including the day to day management of loans, monitoring of loan covenant compliance, servicing committees, and preparation of investor reports including loan watch lists.
Property and insurance surveillance will continue to be outsourced to existing third-parties where relevant.
Situs, which has advised on more than €40bn European real estate debt since entering Europe seven years ago,was established in the US in 1985 co-founded by Martin Bronstein, Ralph Howard and Steven Powel, and provides commercial real estate debt advisory, primary and special loan servicing, asset management, valuation services on both sides of the Atlantic and increasingly throughout the Continent.
In Europe, Situs operates offices in London, Frankfurt, Dublin and Copenhagen.
Ranieri Partners owns a number of real estate platforms including Ranieri Real Estate Partners, which buys in joint venture structures in the US across all property types and creates value through special servicing, asset management and loan restructuring in distressed real estate.
Founder Lewis Ranieri is an American finance visionary who helped pioneer mortgage-backed securitisations at Salomon Brothers in the 1980s, has bought The Situs Companies, the real estate advisory firm.