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3650 REIT Loan Servicing LLC AVERAGE Commercial Mortgage Loan Special Servicer Ranking Affirmed; Ranking Outlook Stable


  • 3650 REIT Loan Servicing LLC performs asset management, loan servicing, and loan workout and resolution for subsidiaries of its parent company, 3650 REIT Holding Co. LLC, a commercial real estate lending, investment management, and services firm.
  • We affirmed our overall AVERAGE ranking on 3650 REIT Loan Servicing LLC as a commercial mortgage loan special servicer.
  • The ranking outlook is stable.

NEW YORK (S&P Global Ratings) Nov. 24, 2021--S&P Global Ratings today affirmed its AVERAGE ranking on 3650 REIT Loan Servicing LLC (3650 Loan Servicing) as a commercial mortgage loan special servicer. The ranking outlook is stable.

Our ranking reflects 3650 Loan Servicing's:

  • Experienced senior managers, including several 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 newer venture;
  • Formal training program that supplements on-the-job training;
  • Good leverage of a third-party asset management and special servicing system;
  • Thorough, though newly developed, internal control environment that is built on a solid framework and includes a well-defined delegation-of-authority matrix and internal audit regime; and
  • Limited special servicing resolution track record within the current platform.

Since our prior review (see "Servicer Evaluation: 3650 REIT Loan Servicing LLC," published March 11, 2020), the following changes and/or developments have occurred:

  • The head of loan servicing left the company and was replaced by a senior vice president, who has significant tenure with 3650 Loan Servicing LLC and its parent company. Prior to taking on the new role, the head of loan servicing was a senior manager at the company and has also held several senior manager positions at Grass River Property LLC, an affiliate of 3650 Loan Servicing's parent company. Previously, the new head of loan servicing was a senior portfolio manager at another S&P Global Ratings-ranked commercial mortgage loan special servicer.
  • The named CMBS special servicing portfolio grew to six transactions with 149 loans and approximately $3.8 billion in unpaid principal balance (UPB) as June 30, 2021 from one transaction with 32 loans and approximately $828.0 million in UPB.
  • The active special servicing portfolio grew to two assets from zero, and has a UPB of approximately $37.3 million as of June 30, 2021.
  • An external third party was engaged to conduct internal audits of 3650 Loan Servicing.
  • The parent company successfully implemented its disaster recovery and business continuity plan in response to the COVID-19 pandemic. Employees were able to work from home effectively utilizing MS Teams and other real-time technology to facilitate communication. Most employees are now working in the office.
  • In response to the distress caused by the COVID-19 pandemic and associated lockdown measures, the special servicing team successfully limited transfers to special servicing by proactively reaching out to borrowers to provide assistance. The team also created an updated asset business plan template to analyze and process borrower relief requests.
  • 3650 Loan Servicing worked with its vendor to make several improvements to its third-party special servicing system environment, including enhancing the borrower consents form, which now auto-populates and allows approvals within the system.

The ranking outlook is stable. 3650 Loan Servicing has built the infrastructure to be a capable commercial mortgage loan special servicer and has tested its controls and systems through the management of a small portfolio of special servicing assets, as well as its performing loan portfolio. We expect that it will maintain the people, processes, and technology needed to effectively administer a special servicing portfolio consistent with its near-term growth strategy.

The financial position is SUFFICIENT.

This release does not constitute a rating action.

Related Research

Servicer Analyst:Paul L Kirby, New York + 1 (212) 438 1365;
Secondary Contact:Steven Altman, New York + 1 (212) 438 5042;
Analytical Manager, Servicer Evaluations:Robert J Radziul, New York + 1 (212) 438 1051;

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