Fitch withdraws Solutus’ rating over ‘incorrect and misleading information’

Fitch Ratings has withdrawn its ratings for Solutus Advisors citing that the commercial property loan servicer had provided “incorrect and misleading information during the initial rating process”.

In a brief statement published on Friday, Fitch wrote that: “Fitch will no longer maintain the [Solutus Advisors] rating. Accordingly, Fitch will no longer provide ratings or analytical coverage for Solutus Advisors.”

Solutus Advisors said it was seeking clarification for the “regrettable” decision.

James Drayton, CEO of Solutus Advisors, said: “Fitch’s decision to withdraw our rating is regrettable and comes at a point when Solutus’s business platform is considerably stronger than it was when it received its initial rating from them as a new special servicer entering the market.

“Fitch is well aware of the significant steps we have taken to enhance our platform and have raised no concerns with us about the ability of that platform to conduct our business.

“In fact, it was only one week ago that Fitch raised new queries which we addressed fully and quickly.

“The last of these was received just over an hour before they sent out the announcement although Fitch was well aware at this point that we were urgently working on our response to it. We are still intending to deliver our response to them early this week in a spirit of openness and co-operation.

“The relationship with Fitch has never been an easy one, despite the efforts we have demonstrably made in terms of the considerable investment in our business infrastructure and in our people to provide them with the reassurance they requested from a new entrant to the market.”

Solutus Advisors is still rated by Standard & Poor’s.

Solutus was founded in October 2010 with financial support of a private equity firm, thought to be Cheyne Capital Management from which Solutus is understood to have won a string of early CMBS mandates from.

In August, Fitch wrote that Solutus has a robust resource management plan in place for anticipated future growth, and will have an additional asset manager in place at the end of June 2012.

As of the end March 2012, Solutus was actively special servicing eight loans secured by 12 commercial properties in the UK.

For the 12 months to the end of January, Solutus made a £346,089 loss, although a profits for the year to next January is forecast.

Drayton added: “In the light of Fitch’s decision last week on RACS which sees it withdrawing the provision of rating confirmations for EMEA CMBS special servicer replacements, the loss of their rating becomes of less importance to us, although it raises many questions yet to be addressed by our industry. This, of course, was an important factor in our commitment to Fitch’s rating process.

“So, considerably stronger, with an enhanced platform and with ambitious plans in the UK and Europe, we do not see this decision as a major set-back and in the interests of both organisations moving forward, hope to keep a dialogue between us which is at all times amicable and constructive.”

About CoStar News

Finance Editor, CoStar News
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