Fitch Affirms Hudson Americas' Commercial Special Servicer RatingFitch Affirms Hudson Americas' Commercial Special Servicer Rating
The special servicer rating reflects Hudson's demonstrated ability to work out and liquidate commercial real estate loans, its strong management team, and the company's investment in technology. While quality control aspects of the company's asset management system are less robust than other highly rated servicers, Hudson continues to improve reporting capabilities and make greater use of McCracken Strategy to address quality control metrics for CMBS loans. The rating also considers elevated employee turnover, internal controls (primarily consisting of management reporting and internal audits), the financial condition of the parent company, and the relationship with its affiliate, the Lone Star Funds (Lone Star).
Hudson is the U. S. subsidiary of Hudson Advisors L. P. (Hudson Advisors). Hudson Advisors, along with its subsidiaries (including Hudson) performs due diligence and analysis, asset management and other support services for Lone Star and the assets acquired by Lone Star's funds. The founder of Hudson Advisors is a principal of Lone Star. In addition to servicing responsibilities, Hudson underwrites and develops resolution strategies for fund investments that include sub-performing and nonperforming commercial real estate loans. Hudson's business model is dependent on the future commercial real estate investments made by Lone Star's funds, which have a track record of successfully capitalizing on market dislocations during the past 20 years, demonstrated by Lone Star's successful fundraising history.
As of Sept. 30, 2016, Hudson was named special servicer for 435 loans totaling $2.1 billion, broken out into 203 loans totaling $976.2 million in four CMBS transactions and 232 non-CMBS loans totaling $1.1 billion. The non-CMBS portfolio is predominately made up of REO assets reflecting Lone Star's focus on equity investments to reposition properties; REO properties comprise 69% of the non-CMBS portfolio (517 properties totaling $10.8 billion).