Third Parties Gain Ground in CMBS Special Servicing

Fitch Ratings headquarters in Lower Manhattan.

NEW YORK CITY—There’s been a shift the roster when it comes to the players in CMBS special servicing. In a year-end review of servicing trends, Fitch Ratings sees a move toward third-party firms even as the “traditional cartel” of legacy special servicers, which invested in controlling bond positions, continues to hold the largest balance of active special servicing.

The three 800-lb. gorillas of special servicing—LNR Partners LLC, CWCapital Asset Management LLC, and C-III Asset Management LLC—maintain 82% (by loan count) of the active CMBS special servicing total, including REO, as of this past Dec. 31. However, Fitch says, “by named balance, the shift to third-party special servicing is evident as Midland Loan Services and Wells Fargo Bank (who do not invest in controlling bond positions) rank first and second, respectively, for named CMBS by balance” excluding Fannie Mae in the multifamily space.