Solutus Advisors AVERAGE Ranking Affirmed As U.K. Special Commercial Mortgage Servicer; Outlook Stable

  • We have affirmed our overall AVERAGE ranking on Solutus Advisors as a special servicer of commercial mortgages in the U.K.
  • Solutus Advisors is a loan servicing and advisory firm, owned by the Acepark Group, covering a range of pan-European commercial loans and real estate.
  • The outlook is stable.
MILAN (S&P Global Ratings) March 27, 2020--S&P Global Ratings has affirmed its overall AVERAGE ranking on Solutus Advisors Ltd. as a special servicer of commercial mortgages in the U.K. The outlook on the ranking is stable.
As of December 2019, Solutus Advisors managed a total portfolio of £3.64 billion commercial mortgages, up from £2.17 billion in 2017. At the same time, the special serviced portfolio decreased to £265 million, comprising three loans, as of December 2019, from £474 in 2017.
Our ranking reflects Solutus Advisors':
  • Current executive team, which has the experience to continue supporting the company's development.
  • Institutional and financial backing from the Acepark Group, which provides support for IT, human resources, marketing and finance.
  • Solid training and induction programs with average hours higher than those of similarly ranked peers.
  • Use of Grant Thornton UK LLP for its annual internal controls audit and DLA Piper for its procedures review. This provides an independent assessment of the detective controls and offsets the company's reliance on the executive team, which performs the risk management and compliance functions. These functions are typically the responsibility of independent groups in larger servicers.
  • Adequate special servicing resolution track record.
Since our previous review (see "Servicer Evaluation: Solutus Advisors Ltd.," published on Aug. 4, 2017), the following changes and developments have occurred:
  • Despite the overall portfolio growth due to the increase in the primary servicing business, the special servicing business has continued to decrease due to the U.K. mortgage market's improved loan performance. Although it is outside the scope of our analysis, a growing primary servicing business could in part offset the higher operational risk associated with a shrinking special servicing function.
  • Following the 2017 departure of the former European Servicing Director, management spread the European servicing function across the whole team, and it simplified its organizational structure.
  • At the beginning of 2019, the company adopted a new system (Fairways Debt) to handle loan administration for primary servicing, shifting to automated loan management from a manual process based on Excel spreadsheets. This represents an important achievement for the company because it will reduce risks linked to manual errors in primary servicing. The company still uses Excel for the three remaining special serviced loans currently under management.
  • At the beginning of 2019, the company started utilizing a new management system software for managing tasks, which should help the team improve coordination among staff members.
The outlook is stable. In our opinion, Solutus Advisors has adequate procedures and knowledge in place to manage its special servicing portfolio, given that as of December 2019 the company was managing three special serviced loans only.

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