TEXT-S&P assigns, affirms Situs, Helio-related servicer ranks

Tue Dec 4, 2012 11:11am EST

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OVERVIEW
     -- Helios AMC LLC acquired The Situs Cos. and its subsidiaries in October 
2011 and changed its name to Situs Holdings LLC. The commercial primary 
servicing business continues to operate as Situs Asset Management.
     -- We assigned an overall ABOVE AVERAGE ranking to Situs Holdings LLC as 
a commercial loan special servicer and affirmed our overall ABOVE AVERAGE 
ranking on Situs Asset Management as a commercial loan primary servicer. The 
outlook for both rankings is stable. 
     -- We have consolidated our commercial special servicer rankings for 
Helios AMC LLC and Situs Asset Management, and the combined special servicing 
business will operate as Situs Holdings LLC.
     -- We based our opinion of the combined company's primary and special 
servicing operations on the company's experienced senior management team, 
well-defined operational processes, effective use of technology systems, and 
sound control environment.
    
     Dec 4 - Standard & Poor's Ratings Services today assigned its ABOVE AVERAGE
ranking to Situs Holdings LLC (Situs) as a commercial loan special servicer and
affirmed its ABOVE AVERAGE ranking on Situs Asset Management (SAM) as a
commercial loan primary servicer. Our outlook for both overall servicer rankings
is stable. Our subranking for management and organization for both operations is
ABOVE AVERAGE, and the subrankings for primary and special servicing loan
administration are ABOVE AVERAGE.

Helios AMC, a Ranieri Partners-sponsored company, acquired Situs and its 
subsidiaries in October 2011. The combined company is now known as Situs 
Holdings LLC. The majority of senior management from both Situs and Helios 
assumed leadership positions with the newly combined company. The commercial 
primary servicing business continues to operate as Situs Asset Management and 
Situs (the former Helios AMC LLC and SAM special servicing operations) 
operates the consolidated special servicing business.

The ranking actions reflect our view of the company's highly experienced 
senior management team, good compliance and control environment, and effective 
use of technology. Additionally, the company has made solid progress 
integrating the legacy SAM and Helios AMC platforms and it has completed 
several technology enhancements, including the successful conversion to a new 
loan servicing system. At the time of our review, the company did not maintain 
a formal internal audit function. However, it is working with an external 
accounting firm and has developed an internal audit program for both primary 
and special servicing. Management implemented this program in the third 
quarter of 2012.

KEY RANKING FACTORS

Strengths:
     -- Well-defined operational processes and an effective use of technology 
systems;
     -- An experienced senior management team; and
     -- A good compliance and control environment.

Weakness:
     -- No formal internal audit program at the time of review;
     -- No borrower Web site; and
     -- Recently high turnover rate due to fluctuations in portfolio volume.
 
Ranieri Partners offers a full suite of financial services, advisory, asset 
management, and operating and work-out services for real estate and corporate 
clients. The residential division of Ranieri Partners includes Selene Finance, 
which invests in distressed residential mortgages and provides special 
servicing and Shellpoint, which originates and securitizes residential 
mortgages. The firm's commercial real estate platform provides asset 
management on fixed income, structured products, and distressed securities, as 
well as asset management, advisory, and valuation for distressed commercial 
real estate.

SAM and Situs are focused on commercial mortgage primary and special 
servicing, respectively, and they offer due diligence, debt and equity 
management, and investment services. In total, Situs employs more than 350 
professionals and its headquarters are in Houston, Texas. The company has 11 
offices across the U.S. and Europe.

As of June 30, 2012, SAM's primary servicing portfolio included approximately 
760 loans, constituting a total unpaid principal balance of approximately $8 
billion. The loans are collateralized by more than 5,700 properties. This 
results in a relatively high property-to-loan ratio of 7.5 to 1 (typically we 
observe ratios closer to 1.3 to 1) and is caused by a few large loans backed 
by a large volume of properties. The portfolio is geographically dispersed and 
contains all major property types. SAM services loans for a diverse mix of 
investor types including commercial mortgage-backed securities (CMBS), life 
insurance company mortgages, commercial real estate collateralized debt 
obligation (CRE CDO) transactions, and private equity and investment funds.

As of June 30, 2012, Situs managed a special servicing portfolio of 585 loans 
and 876 properties totaling $4.7 billion and 73 real estate owned (REO) assets 
totaling $615 million. The company is the named special servicer on 13 CMBS 
transactions backed by 1,914 loans with an unpaid principal balance (UPB) of 
$25.2 billion. Additionally, Situs manages one CRE CDO transaction with a 
total UPB of $1.3 billion. The special servicing portfolio includes assets 
originated by a variety of capital sources, complex loan structures, and all 
major collateral property types located throughout the U.S.

OUTLOOK

Our outlooks for the primary and special servicing rankings are stable. The 
company has made solid progress integrating the legacy SAM and Helios 
platforms. The business development strategy and growth projections for the 
company are reasonable and build on the strengths of the combined companies.

RELATED RESEARCH AND CRITERIA
     -- Standard & Poor's Comments On Potential Conflicts of Interest Within 
Commercial Special Servicing Market, March 9, 2012
     -- Situs Asset Management, Helios AMC LLC Commercial Special Servicer 
Ranking Outlooks Revised To Developing, Dec. 22, 2011
     -- Situs Asset Management Servicer Evaluation Report, dated Aug. 16, 2011
     -- Servicer Evaluation: Helios AMC LLC, Nov. 17, 2009
     -- Revised Criteria For Including RMBS, CMBS, And ABS Servicers On 
Standard & Poor's Select Servicer List, April 16, 2009
     -- Servicer Evaluation Ranking Criteria: U.S., Sept. 21, 2004.
     -- Select Servicer List
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