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Jan 23 (The following statement was released by the rating agency)
Fitch Ratings has affirmed Lohnbach Investment
Partners GmbHa€™s (Lohnbach) German Commercial Special Servicer Rating at a€˜CSS2-a€™.
The rating reflects Lohnbacha€™s robust approach to asset management. Lohnbach
focuses exclusively on the German market and on assets mainly in secondary and
tertiary locations with high capital expenditure requirements. Lohnbacha€™s
prudent due diligence and thorough business plans are reflected by stable loan
recovery performance. In addition, Lohnbach has further broadened its servicing
experience in the past 12 months with the on-boarding of a new portfolio for the
first time since 2008 and the recent work-out of assets by actively using real
estate owned structures.
Lohnbach has used an external consultancy to co-source its internal audit
function for more than four years. Fitch considers this resourcing model good
practice given the relatively small size of Lohnbacha€™s operations. This is
further underlined by no major findings, which highlights strong controls in
The staff turnover of 29% across all levels of the organisation during 2012/13
is above peers. This is also reflected in lower average company tenure among
staff than peers. According to Lohnbach, the company mitigates this by hiring
more junior staff and offering career progression. Furthermore, Lohnbach has
shifted more resources to the acquisition team, recognising the need to board
Lohnbacha€™s financials continued to improve in 2012. The company made a small
profit for the first time within the past four years despite an increase in
costs. This was mainly achieved by increasing income from advisory services. The
company does not have an Issuer Default Rating or a rated financial parent.
However, Lohnbacha€™s overall assets under management have declined since 2008 and
new loans under management are required in the medium to long term to keep the
business operation sustainable. This is only partially mitigated with the take
on of one new portfolio into servicing in June 2013 and the servicing of a new
asset at the beginning of the year. In addition, Lohnbach has confirmed that
funding is available to obtain servicing mandates for new portfolios through
On 30 June 2013, Lohnbacha€™s total servicing portfolio included four securitised
NPL transactions comprising 12 loans with a gross book value of EUR433m
(year-end 2011: 28 loans, EUR577m). The portfolio is secured by open market
value (OMV) primarily by commercial properties and to a small degree by
residential properties including office (65.7%), healthcare (16.6%), retail
(13.2%), residential (2.1%) and other commercial (2.5%).
Fitch employed its global servicer rating criteria in analysing the servicer's
operations and financial condition, including a comparison against similar
German servicers as part of the review process.