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Servicer Evaluation: Trimont Real Estate Advisors UK Ltd.

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Servicer Evaluation: Trimont Real Estate Advisors UK Ltd.

Ranking Overview
Subrankings
Servicing category Overall ranking Management and organization Loan administration Outlook
Commercial mortgage primary servicer ABOVE AVERAGE STRONG ABOVE AVERAGE Stable
Commercial mortgage special servicer AVERAGE STRONG AVERAGE Stable
Financial position SUFFICIENT

Rationale

S&P Global Ratings' overall rankings on Trimont Real Estate Advisors UK Ltd. (Trimont UK) are ABOVE AVERAGE as a primary servicer and AVERAGE as a special servicer of commercial mortgages in the U.K. In each case, the overall rankings are based on the lower of a STRONG subranking for management and organization, an ABOVE AVERAGE subranking for primary servicing, and an AVERAGE subranking for special servicing loan administration. The outlook on each ranking is stable.

Our rankings reflect Trimont UK's:

  • Financial support from its parent, Trimont Holdings LLC, and operative support from its sister company, the U.S. based servicer Trimont Real Estate Advisors LLC (Trimont U.S.);
  • Experienced senior staff, including management who previously held leadership positions at other S&P Global Ratings' ranked commercial mortgage loan primary and special servicers;
  • Diversified array of formal internal and external training programs, as well as on-the-job training;
  • Integrated IT systems that are consistent across the globe, albeit some customization has been done for regional differences;
  • Solid disaster recovery and cybersecurity protocols provided by Trimont U.S.;
  • Good internal controls environment, which is supported by Trimont U.S., although internal audits for Trimont UK only started in 2020;
  • Solid growth in primary servicing volumes over the last 24 months, although it has a concentrated client base; and
  • Experienced Trimont UK staff with a relevant background in managing nonperforming commercial mortgages in the U.K., albeit there are currently no specially serviced loans under management. However, this is in line with the recent limited market of nonperforming loans in the U.K.

Trimont UK is a wholly owned subsidiary of Trimont Europe LLC, which is ultimately owned by Trimont Holdings LLC, the parent. The parent also controls other subsidiaries (collectively the group or Trimont) including Trimont U.S., the U.S. servicing subsidiary. Trimont U.S. provides operational support such as human resources, information technology and internal controls, to Trimont UK through an intracompany group agreement.

Trimont is a privately owned commercial real estate asset management company with more than 30 years of operating history. We have ranked Trimont U.S. since 2004 for special servicing, 2006 for construction loan primary servicing, and 2014 for primary servicing. Trimont U.S. provides a full range of services to real estate commercial mortgage lenders and investors on both debt and equity investments in the U.S. The company considers its operating model to deliver customized high-touch mortgage servicing solutions rather than high-volume standardized products.

Trimont established its U.K. operations in London in 2013 and it has adopted Trimont U.S.' best practices, policies and procedures, and IT solutions when possible, or has customized them to the U.K. and European jurisdictions when necessary. Trimont UK reported substantial growth starting in late 2018 with the hiring of two staff based out of London including the EMEA president. This was followed by the hiring of a six-person credit and asset management (CAM) team in early 2019 followed by additional hires in 2020. As of June 2021, the Trimont UK team is 33 persons.

Trimont has eight offices globally with coordinated, integrated investment advisory, CAM, and credit administration teams. Its global growth has been driven over the last two years by a larger percentage of global institutional clients, many of whom Trimont acts as commercial mortgages servicer for in multiple jurisdictions.

The financial position is SUFFICIENT.

Profile

Servicer Profile
Servicer name Trimont Real Estate Advisors UK Ltd
Date formed and name at incorporation September 2013, Trimont Real Estate Advisors UK Ltd.
Parent company (if applies) Trimont Holdings LLC
Assets under management (overall) £13,135,244,292
Assets under management (under assessment) £8,054,429,921
Total staff 21
Servicing staff 14
Servicing centers London
Client types Alternative lenders, banks, debt funds, private equity
All figures above are as of Dec. 31, 2020.

The London office manages all European loans which consists of non-securitized, third-party loans. Our review is limited to Trimont UK's ability to manage U.K. loans.

As of Dec. 31, 2020, Trimont UK had not been appointed on any CMBS transactions or had any active assets in special servicing.

Trimont UK's entire European commercial mortgages loans portfolio, reported a 164% increase (by gross book value, GBV) in 2019, followed by a 87% increase in 2020. Of this portfolio, the U.K. assets (by GBV) represented 73% in 2019 and 61% in 2020.

Chart 1

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Chart 2

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Management stated that Trimont UK has achieved its business plan goals which were set before the COVID-19 pandemic. It has grown its assets under management and expanded its client base.

For 2021, Trimont UK's goals include:

  • Taking advantage of any increased activity in the nonperforming market due to the COVID-19 pandemic, especially in the areas of hospitality and retail advisory;
  • Continuing to advance technology solutions to address and solve clients' data management and reporting challenges;
  • Positioning itself as a credible alternative in the CMBS loan servicing market in EMEA;
  • Increasing loans in Europe under management by 100% in 2021 compared with 2020 (112% in 2020 compared with 2019); and
  • Increasing its client base by over 25% in 2021 compared with 2020.

Management And Organization

The management and organization subrankings for primary and special servicing are STRONG.

Organizational structure, staff, and turnover

Trimont UK is headed by the EMEA president who is part of Trimont's nine member global operating committee. This is the most senior internal operating committee and meets three times a month. Trimont's CEO, CFO, Chief Legal Officer (CLO), Chief Security Officer (CSO), and representatives from each region attend it. The EMEA president is also a member of the 17 member CEO Advisory Board which meets once per month and consists of senior management.

Trimont is organized around three lines of businesses:

  • Investment advisory services
  • CAM; and
  • Credit administration (operational services).

The last two functions cover the primary and special servicing activities on commercial mortgage loans. Trimont UK's organization mirrors this structure.

In addition, Trimont UK has built partnerships with clients by seconding staff members to clients. At the end of 2020, one staff member was on secondment but this number had grown to eight by June 2021. The secondees sit behind a Chinese Wall and maintain reporting lines into the client's management. They provide support to the client that only partially overlaps with Trimont UK's primary servicing, hence this part of Trimont UK's operations is out of scope for our analysis. We only factor them into our review if the seconded team shares synergies with the servicing operations under review.

Trimont UK receives operational support from its sister company, Trimont U.S., on supporting functions, such as human resources, information technology, internal audit, and compliance.

As of year-end 2020, Trimont UK employed a total of 21 staff, which includes three contractors and one staff who is part of the ringfenced secondment team. During 2020, Trimont UK hired new staff in the Credit Administration team, the Investor Relations & Reporting team, two CAM team asset managers, and a European General Counsel. As of June 2021, Trimont UK reports it has hired an additional 12 staff members bringing total headcount to 33 which includes eight staff on secondment.

Trimont UK has reported that of the current staff of 25, 17 of its staff members have primary servicing responsibilities. Of these 17, five are also able to perform special servicing responsibilities as and when new mandates arrive. These staff members report to a managing director (MD) who leads CAM and credit administration functions provided by a combined team.

The rest of the employee base comprises a two-person investor relations & reporting team, a MD responsible for legal & compliance, and a MD of investment advisory & client services. Trimont UK also has two contract staff providing sector expertise along with two other support staff.

Trimont UK's staff have high levels of industry experience in primary and special servicing and property/legal advisory compared to industry peers. In terms of senior and middle management, experience levels are comparable.

Table 1

Experience And Tenure
Experience
Senior management Middle management Staff primary/master servicing Staff special servicing Staff property/legal advisory
2020 24.8 18.4 17.9 24.3 20.2
2019 26.3 17.4 17.9 23.6 20.6
2018 23.6 19.0 19.0 19.0 23.6
Tenure
2020 1.7 3.3 2.7 1.4 1.3
2019 2.0 2.2 2.4 0.6 1.2
2018 2.2 13.9 8.7 8.7 0.5

Tenure levels, however, are short given the age of the company in the U.K. The 2018 tenure figures appear high but are skewed because there were only four employees in that year and included one employee who transferred from Trimont U.S.

Since 2018, Trimont UK has experienced negligible turnover.

Table 2

Staff Turnover Rate
Total staff 2018 2019 2020 June '21
Staff at beginning of period (E) 2 4 15 21
Number of joiners 2 11 7 12
Number of staff leaving voluntarily (A) 0 0 1 0
Number of staff leaving not voluntarily (*) (B) 0 0 0 0
Number of expired contracts (C) 0 0 0 0
Number of staff redundant (D) (**) 0 0 0 0
Staff at end of period 4 15 21* 33*
Turnover rate [A+B+C+D]/E 0% 0% 7% 0%
*Includes 1 and 8 secondees in 2020 and June '21, respectively.
Training

Table 3

Training Hours For New Joiners And Existing Staff
2018 2019 2020
Average annual training hours Induction Average annual training hours Induction Average annual training hours Induction
Internal 7.7 14.5 4.9 14.5 21.0 14.5
External 42.4 0.0 26.7 0.0 16.5 0.0
On the job 7.7 2.5 4.9 2.5 2.0 2.5
Online 19.3 5.0 12.1 5.0 17.5 5.0
Total 77.1 22.0 48.5 22.0 57.0 22.0

Trimont UK receives support from its parent for training and staff development. It has access to the full suite of resources available to all Trimont employees globally. The only difference is that training programs are adjusted to reflect local market variations in custom, law and regulation. Additionally, there is a training budget for the London office.

In terms of induction, all Trimont employees complete a specific curriculum designed for their jurisdiction and include: compliance topics (e.g., anti-money laundering [AML], anti-bribery and anti-corruption, GDPR, and data protection), employee relations, policy and procedures, Trimont systems, customer service, and department overview.

Hence, as in the U.S., Trimont UK provides its management and staff with a diversified array of ongoing formal internal and external training programs, as well as on-the-job training.

Notable features include the following:

  • The company has a dedicated full-time training manager based out of the U.S. who discusses with service line managers to determine overall goals for staff and utilizes internal and external subject matter experts for training.
  • Trimont as a group targets 40 hours training per employee annually, with the London team averaging 57 in 2020. This target included eight required annual courses in areas which are region specific such as GDPR, or global topics such as Diversity, Equality, and Inclusion, information privacy and security, AML, and foreign corrupt business practices.
  • Trimont's Learning Management System (LMS), houses over 800 e-learning courses from Microsoft Office applications to soft skills and leadership development, and tracks globally all employee training hours.
  • Reports are generated monthly from the LMS system and delivered to each manager, who monitors that their team is on track to complete relevant and required training.
  • Annual training on code of conduct and ethics is covered in the employee handbook and each employee verifies that they have received and read the employee handbook by acknowledging receipt in the LMS annually.
  • Trimont offers courses through Trimont University (TU). The certification curriculum for TU continues to evolve through live classroom lectures and online materials, which are co-developed with New York University (NYU) and available to all employees. TU focuses on technical and industry knowledge, as well as professional and personal development.
  • A Trimont partnership with NYU Schack Institute of Real Estate (Schack) offers a three-semester real estate program, consisting of multiple online courses along with in-person speakers which results in NYU credits and certification. In the U.K., one to two people have obtained credit for NYU coursework.

In the U.K., Trimont is partner sponsor of CREFC-Europe and are participants and contributors across various forums. Trimont also encourages and supports the attendance of its employees at CREFC's Young Professionals Real Estate Finance training modules, which focus on different disciplines within CRE finance.

Systems and technology

Trimont UK has access to a wide range of IT resources offered by Trimont which are consistent across the globe. We believe Trimont UK has the necessary technology to meet its primary and future special servicing requirements. In recent years, Trimont has focused on technology augmentation and enhancement projects to further streamline and automate servicing tasks using a combination of proprietary and third-party systems via Strategy and Backshop.

Trimont has well-designed data backup routines and disaster recovery preparedness. There is a data governance committee to ensure data quality and consistency of data throughout the organization. This process includes various data governance domains with assigned business owners. The committee is made up of one representative from each data governance domain. It assesses the cross-functional impact of a data request to ensure a change in one domain doesn't negatively affect another.

Servicing system applications

Trimont UK utilizes the same servicing system and technology applications as the U.S. entity and other jurisdictions around the world. The servicer has customized or employed workarounds to the systems due to the lack of standardization of EMEA loans, compared with the U.S.

These systems and applications include:

  • McCracken Strategy servicing platform, which the servicer upgraded to a new version in February 2020, adding cash enhancements, same day wires, and remittances.
  • Backshop is used for all asset management functions, covenant tracking, and special servicing.
  • Cash Mate, a proprietary platform, handles treasury functions.
  • Documentum software is utilized for its enterprise content management, imaging, and workflow applications. The Documentum repository is integrated with Trimont's portals to allow clients access to pertinent documents.
  • Lucro artificial intelligence (AI) is used for enhanced and expedited data entry for property operating statements which can be time intensive if done manually.
  • Triview is used as a cloud-based portfolio analytics tool for clients. Triview 2.0, launched in December 2019, is based on the Microsoft Azure platform and offers both asset-level and portfolio-level analytics.

Trimont utilizes its centralized data warehouse to assimilate data from various systems--including Strategy, Backshop, Documentum, and Lucro--into one central repository via application programming interfaces that drive client reporting, data feeds, and Triview.

Business continuity and disaster recovery

Trimont UK is covered under Trimont's global business continuity and disaster recovery plans so there is no UK specific plan. The following measures are in place:

  • Trimont has a documented information security plan that governs personnel security matters, facilities, assets, information, and business operations. Internal audits test compliance of the security plan annually.
  • Trimont maintains comprehensive disaster recovery and business continuity procedures, and targets resumption of cash processing and investor reporting within four hours of any disruption event.
  • Trimont's disaster recovery plans are tested at least once annually. The most recent test which covers U.K. operations occurred in October 2020, with a recovery point objective (RPO) of one hour and recovery time objective (RTO) of four hours.
  • Trimont's business continuity testing is conducted at least once every 24 months at the IBM BCRS in Smyrna, Georgia in the U.S. The plan was to coordinate and test the "seats" located at the IBM BCRS testing center in 2020. However, due to the global pandemic, congregating Trimont and IBM employees at the test site was not feasible. When it is considered safe to gather the necessary personnel in that facility, Trimont will look to test out the IBM BCRS services in 2021.
  • There is no physical offsite disaster recovery location in the U.K., but all employees are able to work remotely with company configured laptops with network access gained via the cloud.

Trimont UK has stated that prior to the pandemic, employees were permitted to work one day a week from home. As a result, they were able to transition to working from home smoothly following the pandemic. The current proposed U.K. plan is to return to the office on Sept. 6, 2021 on a rotational basis with reduced numbers to maintain social distancing requirements.

Cybersecurity

As Trimont's platform is global, the UK entity is covered by the same extensive security processes and controls for protecting private information and preventing cyberattacks as the group. This includes security procedures for personal information and vendor information security management.

Key features include the following:

Trimont has annual independent third-party testing for data penetration issues, which was last completed in December 2020, with rotating vendors being used.

Trimont sends employees quarterly phishing emails to test awareness. The company partners with a vendor that monitors and responds to threats and vulnerabilities, alerting management of these events.

All systems are actively refreshed and upgraded to meet increasing software/user requirements and to maintain active vendor support warranties.

IT proactively upgrades and patches all third-party software applications to minimize vulnerabilities, maintain support, and offer additional product functionalities.

IT utilizes various technologies across the global platform that monitor and protect the operating environment, such as checkpoint firewalls, intrusion detection and prevention systems, Sophos Safeguard and endpoint protection solutions, Mimecast email and URL filtering, multifactor authentication, and "What's Up" system monitoring.

Trimont has internal legal counsel with cybersecurity experience, and a stand-alone cyber insurance policy.

In January 2021, Trimont created a new role for a global CSO to oversee all aspects of data security. There is a monthly global data security steering committee (SSC) which is chaired by the CSO and includes the global CEO, CFO, and CLO along with representatives of the global business including Trimont UK's president.

Policies and procedures

Trimont UK shares the same centrally managed policies and procedures as its sister company, which are accessed through Trimont's intranet. All policies are reviewed and updated annually. The annual review process is managed and scheduled by the Trimont global legal department, with sections of each policy owned by a function manager who incorporate changes during the review process. The legal department then finalizes the document and publishes the version on the intranet. The company's policies and procedures serve as a key input to the review scope for internal audit.

Compliance and quality control

The compliance team is a global function and oversees the U.K. entity's activity. A director with 11 years of tenure leads the team and reports to the CLO to maintain the function independent from the business.

The compliance team's focus is on securitized loans. However, as Trimont UK does not currently manage any securitized loans, there has been no scope for compliance testing to date on the U.K. entity. Compliance testing will only be developed upon being mandated on a securitized loan as it will be based on the requirements of each securitization agreement and will include identification of key requirements including any triggering events.

Trimont UK's head of Legal & Compliance oversees the compliance matters related to AML/KYC. The process involves:

  • During the loan execution and closing process, internal and external AML/KYC checks are done on the originating lenders and original obligors in accordance with applicable regulations.
  • Further AML/KYC checks may be undertaken during the life of the loan, in particular if the loan is syndicated, there is a change in the obligor structure or if there are changes to applicable AML regulations.
  • An external resource is used as part of the AML due diligence, screening and compliance checks.
  • If any risks or suspicious activities are identified, these are reported to Trimont UK's head of Legal & Compliance in the first instance.

Quality control exists within the processes managed by the teams responsible by way of integrated, multi-layered checks and measures employing four and six eye checks as appropriate to ensure data is entered accurately. In addition, documents are imported and checked by a specialised document control team. Additionally technology is employed to monitor processes and includes automated robot reports to monitor exceptions specific to business functions.

Risk management

Trimont UK'S head of Legal & Compliance also oversees risk management for Trimont UK and reports to the Trimont CLO, who leads global risk management. Moreover, Trimont has the following three committees to assess and mitigate risk:

  • Operating Committee comprising Trimont senior executives, which considers all risks to Trimont;
  • Security Steering Committee comprising Trimont senior executives, which is focused on IT and data security risks; and
  • Business Continuity Committee comprising primarily service line leaders and experienced operations and risk personnel, which is focused on operational risks and mitigants.

The global risk management function performs a review of insurance forms and coverage amounts at least annually to maintain adequate coverage for global functions. In addition, it also reviews policies and procedure and critical vendors annually.

For 2021, the global risk management plans include updating Trimont's business impact analysis process and ensuring business continuity and technology disaster recovery planning continue to be adequate, along with updating plans to incorporate lessons learned from the past year operating during a pandemic.

Internal and external audits

The internal audit program is globally centralized. Therefore, Trimont UK is subject to the same audit process as its sister company which we consider thorough and independent. The audit team reports directly to Trimont's CFO and serves as the company's third line of defense. A risk assessment is conducted with senior leadership to identify significant risks. Trimont's global internal audit department drafts the audit plan in the fourth quarter each year which the CFO approves before making available to the CEO with oversight from the Board. Any findings identified during an audit results in the development of an action plan, accountability, and delivery dates as part of the final report.

Trimont initiated EMEA specific audit activity in 2020. Last year, the internal audit function performed two internal audits in EMEA on cash management and draw administration.

The cash management audit was to ensure controls over outgoing wire transfers were performing as designed which involved the testing of vouchers and the review of supporting documentation. One low risk finding was identified and has since been resolved. Additionally, the audit identified two areas of process improvement opportunities.

The draw administration audit tested the controls surrounding the distribution of development asset advances. This included reviewing evidence of client's approvals, borrower utilization request components, draw certificates and proper signing authorities on vouchers. The finding was that controls are operating as designed.

In 2021, the focus areas will be on deal set up and records retention.

Trimont including Trimont UK are subject to multiple third-party audits including an annual SOC I – Type II audit which tests the design and operating effectiveness of key internal controls.

Complaint management

Trimont UK has a complaints procedure whereby all formal complaints received are immediately elevated to the line/relationship manager and the head of Legal & Compliance. The head is then responsible for working with the team and the complainant to resolve the matter which involves the following steps:

  • Immediately responding to the complainant confirming their complaint has been received and informing them what will happen next and the timeframes involved;
  • Logging the complaint by recording all facts and details. While there is no specific tool or software to monitor complaints, the team adds appropriate notes within Salesforce. The complaints officer and the relevant individuals coordinate this action to ensure all employees can have knowledge of any incidents.
  • Discussing resolution options with input from all levels;
  • Communicating the proposed resolution to the complainant within five working days; and
  • Closing out the complaint by following through on the agreed resolution and confirming in writing once complete.

Upon the resolution of a complaint, the head also liaises with the team/individuals involved to ensure that any lessons learned are highlighted to the wider team and that, where applicable, policies and procedures are updated/amended to avoid similar future issues.

No formal complaints have been reported to date.

Vendor management

Trimont UK follows the same processes and procedures for managing its vendors as its sister company. Before any vendor is added to the approved list, it undergoes a rigid approval process that includes a review of its work, financial condition, insurance coverage, risk and protection protocols for private and personal data, and a review of the vendor's SOC audits, if applicable.

For vendors typically appointed when managing specially serviced loans, Trimont UK has a policy in place which requires that upon engaging vendors, the scope is clearly defined upfront, the services are priced cost effectively and in line with the local market, and the vendor is properly managed to provide quality of service and achieves asset objectives.

For appointing valuers for primary servicing loans, Trimont UK does not operate a select panel but is led by its clients panel or by the terms of the facility agreement. The servicer typically uses one of three external legal firms.

Insurance and legal proceedings

Trimont UK has represented that its directors and officers, as well as errors and omissions insurance coverage is inline with the requirements of its portfolio size. As of the date of this report, there were no material servicing-related pending litigation items against Trimont UK.

Loan Administration - Primary And Special Servicing

The loan administration subranking is ABOVE AVERAGE for primary and AVERAGE for special servicing.

As of the end of 2020, Trimont UK managed £8 billion of U.K. commercial mortgage loans. The servicer's client base for all EMEA loans increased by 10% in 2019 and 118% in 2020. However, there is some client concentration compared to its peers. The largest client contributed to 52% of the EMEA portfolio, followed by 16% for the second largest client. The top five clients contributed 87%.

Trimont UK currently has a somewhat limited client type focus as the entire primary servicing portfolio is comprised of balance sheet/syndicated third-party loans. Additionally, despite a U.K. portfolio of only 58 loans, it is represented by a variety of property types albeit with a concentration in office (29% of loans), residential (22%), and logistics (19%) (see table 4).

Table 4

Asset Distribution
U.K.
Property type # of loans # of properties £ gross book value (GBV) % of total GBV
Residential 13 23 2,497,616,144 31.01
Office 17 62 2,152,644,018 26.73
Mixed use 5 5 1,001,299,043 12.43
Corporate loans 1 1 947,219,178 11.76
Logistics 11 409 490,052,021 6.08
Hospitality 3 9 329,620,702 4.09
Other 2 7 316,496,815 3.93
Retail 2 4 117,914,000 1.46
Storage 1 16 86,000,000 1.07
Student housing 2 4 59,458,000 0.74
Leisure 1 6 56,110,000 0.70
U.K. total 58 546 8,054,429,921 100.00
Europe
Property type # of loans # of properties £ gross book value (GBV) % of total GBV
Office 9 328 1,747,935,820 34.40
Mixed use 4 10,490 1,105,861,545 21.77
Logistics 16 269 916,997,544 18.05
Residential 5 20 564,706,131 11.11
Data centre 2 2 429,067,931 8.44
Hospitality 3 6 242,934,424 4.78
Retail 3 4 62,948,514 1.24
Leisure 1 6 10,362,463 0.20
Europe total 43 11,125 5,080,814,371 100.00
Total Europe/U.K. 101 11,671 13,135,244,292
*“Mixed use“ above represents residential/retail, office/retail and office/retail/hotel. All of the above figures are as of Dec. 31, 2020.

Table 5

Portfolio Evolution
2018 2019 2020
Commercial portfolio description by gross book value (£)
Commercial mortgages primary portfolio 1,327,500,000 5,085,819,822 8,054,429,921
YoY growth rate 283% 58%
Commercial mortgages special portfolio - - -
YoY growth rate
Total under assessment (U.K.) 1,327,500,000 5,085,819,822 8,054,429,921
YoY growth rate 283% 58%
Total under management (U.K./Europe) 2,650,747,745 7,007,605,325 13,135,244,292
Commercial portfolio description by loans
Commercial mortgages primary portfolio 8 31 58
YoY growth rate 288% 87%
Commercial mortgages special portfolio - - -
YoY growth rate
Total under assessment (U.K.) 8 31 58
YoY growth rate 288% 87%
Total under management (U.K./Europe) 24 47 101
Clients
Commercial clients 10 11 24
Staff
Overall staff 4 15 21
Operative staff 3 15 14
Operative staff - primary 2 9 9
Operative staff - special 1 6 5
YoY--Year-over-year.
New-loan boarding

Similar to other support functions, new loan boarding for Trimont UK is operated centrally in Atlanta where nine employees are trained to board new loans onto Strategy.

In 2020, Trimont UK boarded 56 EMEA loans with a value of £6.4 billion. This included two portfolios. Based on its stated practices and written procedures, Trimont UK has a sound loan setup function.

Features of the process are:

  • The asset manager part of the U.K. based credit administration team collects and uploads all core loan documents to the internal document sharing software. The central document management team in Atlanta then uploads all transaction documentation into the document repository (Documentum).
  • Using information uploaded to Documentum, the Atlanta loan on-boarding team creates the deal in Strategy and inputs the required information for credit administration (the facility agent assigned to the transaction) to review.
  • If relevant, the deal is electronically replicated in the credit management software (Backshop) and reviewed by the assigned asset manager.
  • Credit administration in London reviews all loan closing documentation, and the loan set up in Strategy and reaches out to the lender(s) or their adviser for any clarification needed.
  • Credit administration liaise with the operating bank to ensure accounts are opened and mandates are in place with the appropriate access rights over blocked accounts.
  • Credit administration performs call back verifications on the lenders' account details set up in CashMate to ensure correct banking details have been recorded.
  • Where required, credit administration and the asset manager conduct an introduction call with the borrower to define roles and set expectations.
Payment processing

All members of the CAM and Credit Administration team at Trimont UK are trained to manage payment processing using CashMate which is the system for approving wire transfers and incorporates the necessary internal controls and checks. The following procedures employed indicate sound internal controls as no one person has the ability to move funds independently:

  • The asset manager first chooses the appropriate voucher type and inputs the required details which are assigned at closing and are pre-defined, locked fields.
  • The system then creates a voucher file and assigns a voucher number for the appropriate individuals to review and approve. Each voucher requires two people to approve.
  • Once approved in CashMate, the credit administration team creates the payment instruction in the appropriate banking system which then requires further approval from two authorized individuals depending on the banking mandate.

95% of payments are made electronically. For the remaining 5% of instructions (in which the operating bank requires a 'wet ink' signature), the voucher is still first created electronically and requires two sets of four eye checks before sending remittance instructions to the operating bank.

Bank accounts are reconciled quarterly or monthly depending on the interest payment date schedule.

In 2020 there were three remittances which were made outside of the contracted timeframe in which payments were made late by remitting banks. In these instances, Trimont UK staff follow up immediately with the appropriate relationship manager to confirm the root cause and subsequently work with all parties involved (banks, borrowers, and lenders) to ensure steps are taken to avoid a recurrence. Typical solutions involve working with the borrower to apply pressure to the remitting bank from both sides, pre-advising remitting banks and following up with requests for confirmation of receipt on payment date, and submitting payment instructions a day ahead of the deadline.

Client management

At Trimont UK, the client management function is headed by a managing director who oversees the client relationship management process. However, the servicer also emphasizes the responsibility of all employees to engage with clients. All client interactions are managed through the Salesforce system. The Salesforce applications sits within the intranet for all employees to view and use.

Additionally, there is global coordination within Trimont as many of its U.K. clients are also U.S. clients and are covered under global master agreements. Annual client business plans are written with the help of regional client relationship managers.

Investor and client reporting

In Q3 2020, a director was hired out of the U.K. to head a new centralized global investor reporting team consisting of one other staff member with a mandate to increase transparency and provide market participants with access to data.

Trimont relies on its systems which track loans through CashMate, Strategy, Backshop, and Documentum, which in turn feeds the data warehouse and Triview. Data is then available online via the Triview dashboard or can be provided directly via flat file or Application Programming Interface (API) data feeds into clients' software. API is a software intermediary that allows two applications to talk to each other.

Currently, the team reports on the U.S. securitized book under CREFC guidelines which consist mostly of CLOs and tend to be more standardized. The changes that the team has made to date to have been mostly internal, involving the streamlining of processes.

The plans for reporting on future European securitizations would be to make additional reporting via a Trimont hosted web-based reporting portal, in addition to the usual reporting passed on to the cash manager in line with servicing agreement. This additional reporting would include overviews from a transaction, note, tenancy, and covenant perspective, with the goal of enabling investors to manage portfolio risk more accurately. Given that Trimont UK has yet to manage an EMEA securitized loan, we will continue to monitor its progress.

Separately, client quarterly reporting is prepared by the asset managers and are tailored to the lender's requirements. The process involves agreeing and setting up initial quarterly asset review (QAR) templates which are adhered to thereafter. We have reviewed a sample QAR and they appear clear and concise.

Primary servicing

Primary servicing tasks are divided into two teams, credit administration and CAM at Trimont UK. Both report to the same MD. As of Dec 31, 2020, there were nine members in the combined teams but had increased to 17 in June 2021.

The credit administration team performs the more mechanical aspects of servicing typically associated with a facility agent and security trustee role. These tasks include generating interest calculations, monitoring receipts of all income into controlled borrower accounts, collecting financial reporting, and monitoring trigger events.

By contrast the CAM team specializes in producing more in depth analysis of loan and borrower performance providing a more technical/advisory service to lenders.

All loan data can be made available to the lender through the Triview portal. Client quarterly asset reports are delivered in PDF or excel format depending on the client's specific requirements.

Watchlists are automatically generated and distributed on the 20th of each month. These are based on CREFC guidelines but additional criteria may be added based on client expectations.

As of Dec. 31, 2020, one loan (0.6% of the U.K. portfolio by GBV) was reported in arrears.

Borrower requests and loan modifications are tracked through Strategy. As at year end, there were a total of nine loans that were modified (equating to 8.9% of GBV) which included such actions as covenant and amortization holidays in exchange for new equity injection, a capex facility reduction and maturity extensions.

Special servicing

Trimont UK does not currently have an active special servicing portfolio and lacks a U.K. track record of loan resolutions. Therefore, the special servicing loan administration subranking considers Trimont UK's senior managers' experience and track records in previous special servicing roles. It also considers our review of its special servicing processes, which demonstrate a fulsome understanding of loan resolution.

Trimont UK has reported that as of June 2021, five of the 17 members performing primary servicing responsibilities are also able to perform special servicing responsibilities if new mandates arise. In addition to these five, the European president, the MD of Client Services & Investment Advisory, the MD of Legal & Compliance, and two sector consultants have considerable experience with nonperforming loans in their prior roles. These 10 individuals have a combined average 22.6 years of special servicing experience. Trimont UK's president was also previously head of special servicing in his prior role before joining Trimont UK.

The team's experience is across European jurisdictions and includes the workout of CMBS 1.0 specially serviced loans and non-performing loan (NPL) portfolios at Irish, U.K., and U.S. investment banks following the global financial crisis. The team also has experience with different loan structures and asset types including alternative sectors such as student accommodation and healthcare. Additionally, Trimont UK has retained the services of two consultants with an average of 35 years experience between them to provide weekly advice on the retail and hospitality sectors, the two hardest hit sectors following the pandemic. Both are surveyors.

The servicer has the following process in place for future transfers of loans from primary to special:

  • The procedures for transfer as dictated under the individual facility/servicing agreement are followed.
  • Business plans are created with input from sector and market expertise and in the context of any mitigating circumstances.
  • All loan data, legal, market and sector advice is logged.
  • The asset manager arranges for a special servicing committee in situations where discretion needs to be applied in accordance with the servicing standard. The committee consists of five individuals.
  • The special servicing team has existing relationships with the majority of established third-party professional advisers in the commercial real estate sector including legal advisers, agencies and third-party debt acquirers.
  • In any recovery scenario, the team would work with third party advisers to formulate workout strategies with a view to maximizing recoveries. All strategies, along with vendor selection, would be reviewed by committee to ensure selections are in line with the servicing standard and Trimont UK's vendor management and engagement policies.

Financial Position

The financial position is SUFFICIENT.

Related Research

This report does not constitute a rating action.

Servicer Analysts:Carenn K Chu, London + 44 20 7176 3854;
carenn.chu@spglobal.com
Marilyn D Cline, Farmers Branch + 1 (972) 367 3339;
marilyn.cline@spglobal.com
Analytical Manager, Servicer Evaluations:Robert J Radziul, New York + 1 (212) 438 1051;
robert.radziul@spglobal.com

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