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CRE Finance World, Summer 2012

Analyzing Special Servicer Performance By count, LNR has disposed of 61% of loans with balance under Figure 7 $10 million entering its portfolio, which is much higher than the Resolution Dist. (bal >= 50mn) average of 54%. In addition, the firm shows the highest rate of disposing of loans with balance between $10 million and $50 million. C-III shows the lowest resolution rate for smaller balance assets, with 50% disposed and 13% cured. Midland appears most likely to pursue a workout strategy with a borrower, regardless of loan size. For loans with balance under $10 million, the firm has disposed of 1.9 times the number of loans it has cured. In contrast, LNR has been very successful in resolving smaller loans and has disposed of 6.6 times the number of loans it has cured. Figure 5 Resolution Dist. (bal < $10mn) Source: NSI, See Footnote 2 Special servicers’ propensity to modify Among these five special servicers, Midland appears most likely to pursue a modification while LNR is much less likely to modify. Excluding modifications performed to the GGP portfolio, 49% of cured loans by count have received a modification (Figures 8 and 9). Within Midland’s portfolio, 68% of cured loans received a modification, while only 25% of loans that LNR has cured have received a modification. Although LNR’s percentage of modified cured loans increases when stratifying the set by balance rather than count, indicating their propensity to modify loans with larger balances, the firm’s modified percentage remains significantly lower than the average, at 37%. Source: NSI, See Footnote 2 Figure 8 Figure 6 Pct of cured loans receiving a mod (ex. GGP) Resolution Dist. ($10-$50mn) Source: NSI, See Footnote 2 Source: NSI, See Footnote 2 CRE Finance World Summer 2012 34


CRE Finance World, Summer 2012
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