Fitch Affirms CMLS's Commercial Servicer Ratings

(The following statement was released by the rating agency) Fitch Ratings-New York-25 September 2020: Fitch Ratings has affirmed CMLS Financial Ltd.'s (CMLS) commercial primary, master, and loan level special servicer ratings as follows: Key Rating Drivers The primary and master servicer ratings reflect CMLS's continued dedication to technology with strong research capabilities, experienced management team and staff growth commensurate with portfolio growth, and the financial condition of CMLS Financial. The ratings also reflect continued high yet declining staff-level turnover. The master servicer rating also reflects potential advancing obligations under stressed scenarios relative to the company's liquidity and earnings and loan concentrations. Advancing concerns are mitigated by low delinquency rates and the presence of back-up advancing agents in Canadian CMBS. The loan level special servicer rating reflects CMLS's growing group of asset managers and experienced senior managers, proprietary technology used in asset management, as well as the company's limited special servicing staffing and the nature of the Canadian commercial mortgage market. CMLS is a privately-owned nonbank lender and servicer that acts primarily as a mortgage broker, placing capital from institutional and fund investors into commercial mortgages across Canada, for which it retains servicing on the majority of loans. CMLS has been originating and servicing commercial real estate (CRE) loans since 1974 and is an active participant in government-sponsored and private Canadian securitization markets. The servicing team is responsible for a growing portfolio of 1,964 loans totaling $16.8 billion. As of June 30, 2020, CMLS's total servicing portfolio has grown 16% by balance and 3% by loan count since 2018 as the company continues to add new clients with seven mandates won in the past 12 months. As of June 30, 2020, CMLS maintains 32 servicing employees for primary, master and special servicing, up from 24 at Fitch's prior review. Staffing growth has occurred in the account management and the loan monitoring and special mandates groups, as the number of high yield and construction loans, which generally have additional covenants, triggers, and required repair disbursements grow. CMLS maintains strong employee training and development practices and a deep bench of experienced senior and middle managers. Over the last 12 months, CMLS implemented a comprehensive new hire training program as well as two professional development series for managers and staff. The servicing group is led by two senior managers with an average 18 years of experience, supported by six middle managers averaging 19 years of experience, providing solid management depth. The special servicing group's asset manager count grew to five from two as three primary and master servicing staff were given additional special servicing responsibilities. Overall turnover in primary and master servicing has declined to 22% from 42% at the last review and was concentrated at the staff level. There was no management turnover during Fitch's current review. The special servicing group experienced 29% overall turnover, up from 15% at the last review. Management turnover was 33% during Fitch's most current review. Prior to 2019, there was no special servicing turnover for Fitch's previous three reviews. CMLS uses SS&C Technologies Precision Loan Management system (Precision LM) Version 3 and expects to upgrade to Version 5 before YE 2020. Dedication to technology is a strength, given the company's track record of developing and enhancing proprietary and third-party systems. Precision LM was recently updated to better track troubled loans and generate loan extension letters, and CMLS is working to centralize reporting into the system. CMLS continues to expand its use of a SharePoint site for quality control and workflows as well. In response to the coronavirus pandemic, CMLS was able to leverage its proprietary Target (NYSE:TGT) application to monitor retail bankruptcy filings and store closures and provide clients exposure reporting of troubled retail tenants. Target is also used for special servicing. As of June 30, 2020, CMLS was the named master and primary servicer for 70 CMBS loans totaling $732.1 million, as well as overseeing an external primary servicer for 12 CMBS loans totaling $83.7 million. In addition, as of the same date, CMLS was primary servicing 1,923 non-CMBS loans totaling $15.8 billion. As of June 30, 2020, CMLS was named special servicer for 82 CMBS loans totaling $815.8 million for three transactions, and was named special servicer for 1,923 non-CMBS loans totaling $15.8 billion. CMLS had one CMBS loan in special servicing totaling $12.8 million four non-CMBS loans in special servicing totaling $40.8 million. During 2020, CMLS received 15 CMBS loan inquiries for possible relief and granted eight modifications as a result of the coronavirus pandemic. Borrowers maintained interest-only payments for three months followed by a six to12-month period to pay back deferred principal resulting in approximately $415,000 in outstanding advances. Canadian CMBS transactions maintain high levels of amortization (approximately less than 10% of loans are interest-only loans) providing for a unified approach to hardship and relief requests among Canadian servicers. CMLS Financial Ltd. ------CMBS Loan Level Special Servicer; CMBS Loan Level Special Servicer; Affirmed; CLLSS3+ ------CMBS Master Servicer; CMBS Master Servicer Rating; Affirmed; CMS3 ------CMBS Primary Servicer; CMBS Primary Servicer Rating; Affirmed; CPS2- Contacts: Primary Rating Analyst James Bauer, Director +1 212 908 0343 Fitch Ratings, Inc. Hearst Tower 300 W. 57th Street New York 10019 Secondary Rating Analyst Adam Fox, Senior Director +1 212 908 0869 Committee Chairperson Tamon Hayes, Senior Director +1 212 908 9169 Media Relations: Athos Larkou, London, Tel: +44 20 3530 1549, Email: athos.larkou@thefitchgroup.com Additional information is available on www.fitchratings.com Applicable Criteria Criteria for Rating Loan Servicers (pub. 07 Feb 2020) (https://www.fitchratings.com/site/re/10108868) Criteria for Rating North American Commercial Mortgage Servicers (pub. 22 Jan 2020) (https://www.fitchratings.com/site/re/10107383) Additional Disclosures Solicitation Status (https://www.fitchratings.com/site/pr/10137406#solicitation) Endorsement Status (https://www.fitchratings.com/site/pr/10137406#endorsement_status) Endorsement Policy (https://www.fitchratings.com/site/pr/10137406#endorsement-policy) ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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