Fitch Rates Solutus Advisors Limited 'CPS3'
SA was founded in 2010 as a commercial special servicer and became primary servicer in 4Q14. The primary servicing portfolio consists of two UK loans, with a value of around GBP204.5m, and eight related assets. SA also acts as facility agent on 21 loans, with a value of approximately GBP550m and 168 related assets, and as special servicer on nine loans with a value of GBP467m and 34 related assets.
SA's primary servicing portfolio is small, and servicing experience is limited compared with rated peers. This means the servicer has not yet been able to demonstrate its ability to effectively manage a variety of loan and asset types. Fitch has therefore taken a conservative approach when comparing SA's servicing performance with peers. The rating takes into account the senior management team's good industry experience and some of the activities SA carries out as facility agent, which are part of the primary servicing role.
SA's infrastructure is not as developed as that seen at more established rated peers. The training and development framework is less structured and reported training hours are below the average, which is reflected in the rating. Acepark Limited, SA's indirect parent, provides the servicer with group HR, IT and corporate finance resources and access to a network of property, accounting and investment professionals. Fitch gives credit to these additional resources as they imply a wider range of knowledge and expertise than the servicer itself can provide.
Fitch views the governance framework at SA as appropriate for the current size of the company. Control of activities is exercised through "four-eye" checks, manager oversight at portfolio level, and regular quality reviews. While the special servicing function of SA is audited annually by an external provider the primary servicing function was audited for the first time in 2016, with a small number of findings. The rating reflects that the servicer has yet to demonstrate a regular and appropriate audit programme with an effective follow-up process.
At the time of review SA had a number of technology projects underway and was in a transitionary period. SA is currently using Microsoft Excel-based models to track and process loan activities, while sourcing for an appropriate servicing platform to effectively manage the variety of loans under management. Although the models are adequate, SA's IT infrastructure does not currently provide the automated controls and timeline management seen across rated peers. SA is also addressing a number of findings raised by the external audit of IT controls.
Neither SA nor its direct parent BG Holdings, are Fitch-rated financial institutions. The audited financial statements for the servicer, over a three-year period up to December 2015, show a positive trend. SA reported an operating profit for the first time in 2014, and in 2015. A loan note facility between the group and SA was reduced to GBP422,000 from GBP1.5m over the period. Fitch expects the growing servicing portfolio to improve the servicer's sustainability over the medium-term.
The rating action commentary is based on information provided to Fitch as of April 2016, unless stated otherwise.
The servicer rating is based on the methodology described in 'Rating Criteria for Structured Finance Servicers' dated 1 July 2016, which includes a comparison of similar UK servicers as part of the review.
Комментарии