Fitch Ratings has upgraded ColumbiaNational Real Estate Finance, LLC's (CNREF) primary servicer rating to 'CPS2' from 'CPS2-'.

The upgrade reflects CNREF's extensive experience servicing commercial real estate loans, highly experienced management team and staff, and substantial investments in its technology environment to improve the company's IT support and disaster recovery capabilities. The rating also reflects the servicing group's key-man risk; while noted as a concern, management depth was demonstrated as CNREF replaced two managers who retired in 2014 internally. The company has historically seen stable operations with little turnover.

Technology improvements include expanded use of a third-party IT vendor, which provides a mitigant to potential system disruptions and enhances the company's proactive monitoring of its IT infrastructure. CNREF stated its maximum possible data loss is less than one hour, a significant improvement from Fitch's last review. Additionally, the company expects operations to resume within 24 hours, in line with other Fitch rated servicers.

CNREF has also made considerable investments in expanding its use of McCracken's Strategy, a commercial loan servicing system. Following an upgrade to version 17.5 in December 2014, CNREF now performs property inspection scheduling and monitoring and financial statement analysis and OSARs for CMBS loans through the system's new Web-portal. Strategy version 17.5 is the first release to use a Web-based portal for some servicing functions. CNREF is currently in the process of implementing release 17.7 for the second quarter 2016 and working on further Strategy enhancements which will allow CNREF to achieve improvements in servicing operations.

CNREF acts as a correspondent lender and servicer for life insurance companies, GSEs and CMBS lenders. As of Sept. 30, 2015, life companies made up 74% of the servicing portfolio by loan count, with the remainder split evenly between CMBS and GSEs. CNREF's loan originations are focused on the mid-Atlantic region with approximately 84% of its portfolio located in Maryland, Virginia, and Washington, D.C. CNREF retains servicing for approximately 83% of originated loans.

As of Sept. 30, 2015, CNREF's total servicing portfolio consisted of 322 loans totaling $2.9 billion. The company acted as primary servicer for 48 CMBS loans totaling $372.8 million in 35 CMBS transactions. Included in its CMBS portfolio are 14 CMBS loans with an unpaid principal balance of $161.6 million for which the company provides limited primary servicing while another servicer performs functions such as payment processing.

The servicer rating is based on Fitch's methodology, as described in the criteria reports highlighted at the end of the press release.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

Applicable Criteria

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998229

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.