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Brean Real Estate Solutions LLC AVERAGE Commercial Mortgage Loan Special Servicer Ranking Assigned; Outlook Is Stable

Overview

  • Brean Real Estate Solutions LLC, an affiliate of Brean Capital LLC, a New York City-headquartered broker-dealer, is a newly formed commercial mortgage loan special servicer located in New York City.
  • We assigned our overall AVERAGE ranking on Brean Real Estate Solutions LLC as a commercial mortgage loan special servicer.
  • The financial position is SUFFICIENT. The outlook is stable.

NEW YORK (S&P Global Ratings) Jan. 12, 2021--S&P Global Ratings today assigned its AVERAGE ranking on Brean Real Estate Solutions LLC (BRES) as a commercial mortgage loan special servicer. The outlook on the ranking is stable.

Our ranking reflects BRES':

  • Experienced senior managers, including executives who previously held leadership positions at other S&P Global Ratings' ranked commercial mortgage loan special servicers;
  • Small staff size and limited operating history as a new venture;
  • Adequately designed training program;
  • Anticipated utilization of an industry-recognized third-party asset management and special servicing system;
  • Adequate disaster recovery and cybersecurity protocols;
  • Internal control environment built on a solid framework, but that has not been fully tested nor fully deployed; and
  • No active special servicing volume and the lack of a special servicing resolution track record within the current platform.

BRES, which is headquartered in New York City, is owned by a shareholder group that includes Quadrant Management Inc., Hunt Capital Holdings, Rob Fine, and Rob Tirschwell. Messrs. Fine and Tirschwell comprise the leadership team of Brean Capital LLC (Brean Capital), a BRES affiliate, which is an independent investment bank that provides services to institutional investors and corporate clients that include fixed income strategy, corporate finance, and advisory investment banking. The aforementioned four shareholders hold identical ownership percentages in Brean Capital.

In July 2020, Brean Capital, through its commercial real estate banking division, formed BRES to house the firm's special servicing and investment management platforms within Brean Capital's Real Estate Debt Strategies' (BREDS) vertically integrated commercial real estate (CRE) debt platform. BREDS was formed in January 2019 and commenced operations concurrent with the merger of Hunt Financial Services' broker-dealer business and Brean Capital. BREDS allows Brean Capital to provide a full service CRE finance business that includes CMBS special servicing, non-performing loans (NPLs), and real estate-owned (REO) management, origination, and distribution.

BRES was established to credit manage, co-invest, and service loans for retained and third-party CMBS B-piece investments, NPLs, and REO portfolios, Hunt Cos. and Brean Capital affiliates-owned assets, as well as Brean Capital's financial institutions group clients and Brean Capital's sales and trading team's institutional clients. However, at present, BRES has no assets in special servicing and has not completed a special servicing loan workout or REO sale in its short history.

The outlook is stable. BRES has built the infrastructure to be a capable commercial mortgage loan special servicer. However, as a newly formed entity, BRES will face challenges with the management, oversight, and training of newly hired personnel, particularly if its staff are working from remote locations, which is the current working arrangement. Nonetheless, given management's extensive experience of managing a substantial loan portfolio through multiple economic cycles at other special servicers, we expect it will maintain the people, processes, and technology needed to operate as a capable special servicer consistent with industry standards.

The financial position is SUFFICIENT.

In light of the assigned ranking, outlook, and financial position, we will add BRES to our Select Servicer List.

Related Research

This report does not constitute a rating action.

Servicer Analyst:Steven Altman, New York + 1 (212) 438 5042;
steven.altman@spglobal.com
Secondary Contact:Geoffrey C Danek, Centennial + 1 (303) 721 4689;
Geoffrey.Danek@spglobal.com
Analytical Manager, Servicer Evaluations:Robert J Radziul, New York + 1 (212) 438 1051;
robert.radziul@spglobal.com

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