KeyBank Real Estate Capital STRONG Rankings Affirmed; Outlooks Are Stable

  • We affirmed our overall STRONG rankings on KeyBank Real Estate Capital as a primary, master, and special servicer.
  • KeyBank Real Estate Capital is a full-service capital provider and mortgage loan servicer with more than 420 employees across its servicing platform. It is a business unit of KeyBank N.A., a wholly owned subsidiary of Cleveland-based KeyCorp, the 18th-largest U.S. commercial bank. Servicing operations are primarily based in Overland Park, Kan., through its loan servicing and asset management division.
  • The outlooks are stable.
NEW YORK (S&P Global Ratings) April 2, 2019--S&P Global Ratings today affirmed 
its STRONG rankings on KeyBank Real Estate Capital (KBREC) as a commercial 
mortgage loan primary, master, and special servicer. The outlooks are stable.

Our rankings reflect KBREC's:
  • Seasoned and experienced management team.
  • Strong audit, compliance, and control environment.
  • Effective technology systems and applications.
  • Substantial institutional commitment to the servicing platform as evidenced by its Mortgage Bankers Association (MBA) rankings, including its second-ranked market position as a Freddie Mac capital markets execution (CME) primary servicer and top-three market position in commercial mortgage backed securities (CMBS) primary and master servicing, accompanied by its top-three ranking across the aggregate of all investor types as measured by unpaid principal balance (UPB).
  • Market position per the MBA as the fifth-largest appointed CMBS special servicer as measured by UPB.
  • Continued focus on staff development utilizing both internal and external training opportunities.
  • Diverse property types in its primary and master servicing portfolio accompanied by strong geographic and investor diversity.
Since our prior review (see "Servicer Evaluation: KeyBank Real Estate 
Capital," Nov. 17, 2017), the following changes and/or developments have 
  • Although KBREC receives and reviews Freddie Mac's audit results for the Freddie Mac CME portfolios for which KBREC is master servicer, it no longer relies on Freddie Mac's audits. After March 31, 2018, KBREC began performing its own audits of Freddie Mac CME primary servicers.
  • Its government special servicing portfolio has declined to zero following the resolution of all FDIC assets and the termination of its Small Business Administration contract.
  • The company realigned the management and oversight of its insurance group under its accounting and investor reporting department from loan servicing and asset management.
  • KBREC's primary/master servicing portfolio grew nearly 28% to $256.6 billion and its named special servicing portfolio rose 47% to $88.4 billion. At the same time, loans and real estate-owned assets in active special servicing increased to $662 million from $416 million.
  • During 2018, KBREC was named master servicer on 57 CMBS/CME/collateralized loan obligation (CLO) transactions aggregating $36.3 billion (1,204 loans) in UPB on $20.2 billion (274 loans) of which it maintains primary servicing responsibilities.
  • During 2018, KBREC was named the special servicer on 57 deals totaling $35.6 billion in UPB across 30 CMBS transactions aggregating $14.5 billion (23 single-asset single borrower and seven conduit), 26 Freddie Mac CME securitizations aggregating $21 billion, and one $170 million CLO.
  • A seasoned asset manager with 15 years of industry experience was promoted to the head of special servicing and asset management in June 2018 and further added the responsibilities of overseeing transactions and business development following the retirement of the senior executive previously responsible for these areas in March 2019.
  • KBREC upgraded to McCracken Strategy Version 19A from Version 17.9.
The outlooks for the rankings are stable. We believe that KBREC will continue 
to perform as an overall effective commercial mortgage primary, master, and 
special servicer for CMBS, government-related entities, and a variety of other 
investors. KBREC's experienced management team has continued to successfully 
make the technological, procedural, and personnel adjustments necessary to 
administer a diverse portfolio according to the industry servicing standard. 

The financial position is SUFFICIENT.
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