TEXT-S&P: 2 CWCapital servicer outlooks revised on acquisition news
June 14 () - OVERVIEW -- We revised our commercial mortgage primary and master servicer ranking outlooks on CWCapital LLC to negative and developing, respectively, from stable. -- The outlook revisions follow Walker & Dunlop Inc.'s recently announced acquisition of CWCapital. -- The outlook revisions reflect our assessment of the potential benefits of the merger as well as the challenges that may arise during the integration of the two companies' servicing platforms. NEW YORK (Standard & Poor's) June 14, 2012--Standard & Poor's Ratings Services today revised its outlook on CWCapital LLC as a commercial mortgage primary and commercial mortgage master servicer to negative and developing, respectively, from stable. Our rankings on CWCapital for commercial primary and commercial master servicing are STRONG (thus precluding a developing outlook) and AVERAGE, respectively. Our STRONG ranking and stable outlook on CWCapital Asset Management LLC as a commercial special servicer remains unchanged. CWCapital will remain on our Select Servicer List consistent with our published criteria. Walker & Dunlop's servicing division is not currently ranked by Standard & Poor's. We revised our outlooks for commercial primary and commercial master servicing following Walker & Dunlop Inc.'s June 8 announcement that it will acquire CWCapital, an operating subsidiary of CW Financial Services, for $220 million. The outlook changes reflect our assessment of the potential benefits associated with the announced acquisition as well as the challenges that Walker & Dunlop may face when integrating the two servicing platforms. Standard & Poor's does not maintain servicer rankings on Walker & Dunlop. The transaction is expected to close within 90-120 days and is subject to stockholder, governmental, and regulatory approvals. Needham, Mass.-based CWCapital originates, sells, and services commercial real estate mortgages. CWCapital began its lending operations in Boston in 1972 and is a national full-service lender to the multifamily and commercial real estate industries. Bethesda, Md.-based Walker & Dunlop originates and sells a range of multifamily and other commercial real estate finance products. The combination of the two companies creates one of the largest commercial real estate lenders in the nation. In aggregate, CWCapital and Walker & Dunlop originated $7.7 billion of commercial real estate loans in 2011. It also creates the second-largest multifamily lender and eighth-largest commercial real estate lender in the U.S. As of June 1, 2012, CWCapital actively managed a primary and master servicing portfolio consisting of 3,400 loans totaling $17.1 billion for multiple lender types including Freddie Mac, Fannie Mae, HUD, commercial mortgage-backed securities (CMBS), and other third parties. As of March 31, 2012, Walker & Dunlop serviced $16.9 billion for Fannie Mae, Freddie Mac, HUD, life insurance companies, and other third parties. We believe the combined company will continue to maintain a reliable and effective primary and master servicing operation. We will, however, monitor the combined operations' ability to maintain operational performance during the integration phase of the two servicing platforms. RELATED CRITERIA AND RESEARCH -- Servicer Evaluation: CWCapital LLC And CWCapital Asset Management LLC, published April 2, 2012. -- General Criteria: Use Of CreditWatch And Outlooks, published Sept. 14, 2009. -- Revised Criteria For Including RMBS, CMBS, And ABS Servicers On Standard & Poor's Select Servicer List, published April 16, 2009. -- Servicer Evaluation Ranking Criteria: U.S., published Sept. 21, 2004. -- Select Servicer List.