NEW YORK, Jan. 28, 2016 /PRNewswire/ -- Morningstar Credit Ratings, LLC today assigned its 'MOR CC2' construction loan servicer ranking and 'MOR CC1' construction loan special servicer ranking to KeyBank, N.A. Morningstar's forecast is Positive for the construction loan servicer ranking and Stable for the construction loan special servicer ranking.
The construction loan servicer ranking is based on KeyBank's lengthy history of administering a diverse portfolio across all major U.S. real estate markets with proactive, controlled asset management practices for loan closing and boarding, draw requests, and project performance monitoring. The ranking also reflects the company's experienced personnel, strong organizational depth, robust audit program, and demonstrated capabilities to expertly service construction loans for third-party investors and for lenders on syndicated balance-sheet loans. KeyBank's technology tools soundly address construction loans, with one system principally used for balance-sheet and syndicated loans, which comprise most of the construction-loan portfolio, and another technology framework for loans serviced entirely for third-party investors. The special servicer ranking is based on the company's exemplary track record in resolving large-scale defaulted construction loans including projects in major urban centers and securitized assets with construction-related issues. The special servicer ranking also considers KeyBank's experienced asset managers and thorough, controlled practices for implementing effective resolution strategies.
The Positive forecast for the construction loan servicer ranking reflects KeyBank's plan to complete additional enhancements and administer all loans through a consolidated technology platform, leveraging the construction-loan modules of its proprietary asset-management system used for third party-owned loans. KeyBank expects the technology consolidation to optimize its workflow, data management, and reporting capabilities. The Stable forecast for the construction loan special servicer ranking reflects Morningstar's expectation that KeyBank will continue to resolve nonperforming construction loans effectively based on the company's well-experienced personnel, proactive practices, and successful results in recent years.
As of June 30, 2015, KeyBank serviced 171 construction loans with a total commitment of approximately $3.7 billion, of which $2.2 billion was funded. Balance-sheet loans, which included 45 syndicated loans, were approximately 85 percent of the portfolio by commitment dollars. As of June 30, 2015, KeyBank had three nonperforming construction loans with a total unpaid principal balance of $43.3 million. Between January 2013 and June 2015, KeyBank restructured eight balance-sheet construction loans and, between 2008 and June 2015, restructured five off-balance-sheet construction loans. During the past decade, KeyBank serviced a larger portfolio and resolved other complex defaulted construction loans of various sizes and types.
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