Fitch Upgrades HAUK's Special Servicer Rating to 'CSS2 '
The UK portfolio size has continued to grow, to GBP2.9bn as of end-June 2015, from GBP2.5bn a year ago. The non-UK portfolio serviced by HAUK has remained largely stable at EUR5.3bn as of end June 2015. In Fitch's view the large servicing portfolio, covering a variety of loan types and jurisdictions, is an indication of the long term sustainability of the servicer. The upgrade reflects the effective management of the growth of the company through continued centralisation of non-asset management-related activities and expansion of the UK- based team.
Since June 2014 the business has continued to consolidate corporate functions to Hudson Advisors Europe Limited (HAEL), Dublin, which hosts the shared service centre for the group. The Hudson group continues to standardise and centralise activities where possible, while maintaining local expertise where appropriate. HAUK is supported by group level functions and has the flexibility to easily upscale according to new business requirements or transfer resources as necessary.
The upgrade takes into consideration HAUK's continued ability to effectively use a wide range of work-out strategies for a variety of loan and asset types, with healthy reported recovery rates across portfolios. Work-out experience continues to grow, and is satisfactory compared with UK-rated peers.
The asset management team continues to grow and the servicer has recruited a number of hotel specialists to focus on this growing area. Average industry experience levels across the servicing teams compare well with peers.
Fitch continues to view the portfolio boarding process, in particular, as a strength of HAUK. It is well-structured, with a significant amount of dedicated resources from across the business and a clear focus on collecting information from both internal and external sources. An interim servicing team ensures a smooth handover.
Hudson has a robust group risk management approach and the bespoke Hudson-developed asset management system. Solid technology systems are supported by recent enhancements and robust disaster recovery, business continuity and IT security plans. In deriving its servicer ratings, Fitch gives more credit to such group resources as they imply a wider range of knowledge and expertise that are available to the servicer.
HAUK lacks the support of a highly rated parent. However, Hudson's solid financial performance over the past 16 years and the company's strong relationship with Lone Star Funds (LS) mitigate financial risks.