Hatfield Philips Comments On Windermere X CMBS

LONDON, June 4, 2014 /PRNewswire/ -- Hatfield Philips International ("HPI"), Europe's largest independent commercial real estate loan servicing firm, comments on its credentials and performance as loan servicer and special servicer on the Windermere X CMBS Portfolio (the "Portfolio").

As outlined in a detailed presentation to noteholders on 11 March 2014, HPI notes the success of its ongoing efforts to maximise the recovery on the Bridge Loan, the Lightning Dutch Loan and the Built Loan. Specifically, HPI highlights that with each of the aforementioned loans it is pursuing a strategy to maximise the recovery to the noteholders in the most appropriate and cost effective manner in accordance with the Servicing Standard.

As it relates to the Bridge loan, HPI explains that shortly after the loan was transferred to special servicing it successfully took control of the borrowing entities through enforcement on Luxembourg share pledges. HPI carefully considered the best approach to asset management for the portfolio. Valad was selected as the asset manager through a competitive process. Together with the property manager, HPI and Valad have arranged a seamless transition of asset management responsibilities. As a result of the change in asset management and the enforcement on the shares, the new directors will be able to make all decisions related to the leasing and sale of the properties without the burden of negotiating with the previous sponsorship. Frequent updates through noteholder calls will occur as the business plan is implemented.

Additionally, as it relates to the Italian loans, IFB & Pavia and Enel Tower, HPI explains that it worked with the existing borrower to extend the loans. As part of the extension, HPI was able to require the borrower to meet specific milestones for leasing and sales for further extensions up to a total of two years. HPI notes the extensions were completed by HPI in its capacity as primary servicer, with fees paid by the borrower group. Importantly, HPI highlights that if the loans had been transferred to special servicing the amount of fees would have been greater than the extension and monitoring fees that have been charged by HPI.

In regards to the Lightning Dutch Loan, HPI notes steps it has taken to stabilise the property including arranging a new asset manager to take control of the property and stabilise individual tenancies after the bankruptcy of TCN, the previous head tenant. TCN had direct relationships with all the occupants through sub-tenancy relationships. Based on extensive business, financial and property analysis, the continued success of the incumbent asset manager and the developing market in the Netherlands, HPI is evaluating different solutions to maximise the recovery. These options include a hold and sell strategy or a sale through enforcement or on a consensual basis.

In discussing the Built Loan, HPI calls to attention the stabilisation of the existing tenancies through lease negotiations and preparation of the properties for sale. HPI notes the size of the loan and the structure of the borrowing entities did not lend itself to an efficient method to enforce the security. HPI remarks that its efforts have enabled it to best work with the existing borrower to help maximise the value of the properties prior to sale.

Given its current performance and track record of success working on behalf of all noteholders to maximise the recovery on the non-performing loans that make up the Portfolio, HPI believes it is best suited to continue to act as special servicer. HPI also comments that changing special servicers – per the request of an entity that HPI believes is no longer the Controlling Class representative – could jeopardise the considerable progress HPI has made on the Portfolio to date.

Furthermore, HPI notes its considerable experience and exposure servicing loans backed by German, Dutch and Italian properties. HPI highlights that it is the only commercial real estate loan servicer with a rated German platform, which it believes it a significant competitive advantage given the Portfolio's German exposure. HPI brings to the attention of noteholders that its proposed replacement currently has no operations in Germany and a limited track record of success in Italy.

HPI requests all noteholders in the Portfolio to closely examine its qualifications and track record, the facts regarding its history of performance on the Portfolio and the flawed directive to replace the firm as special servicer and to query the relationship between the former Controlling Class and the proposed replacement special servicer. HPI also professes its strong belief that the conditions for its termination as special servicer, as outlined in the Servicing Agreement, have not been satisfied.

About Hatfield Philips International Ltd.
Hatfield Philips International is one of Europe's largest primary and special servicer with over £15 billion assets under management. Since its inception in 1997, the Company has established itself as a full-service loan servicer, offering a complete suite of products and services to a wide range of clients that issue, own or invest in commercial mortgage backed securities and loan portfolios. Hatfield Philips is a subsidiary of LNR Property, a United States-based real estate investment, finance, management and development firm, which was acquired by Starwood Property Trust (NYSE: STWD) in April 2013.

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SOURCE Hatfield Philips International