KEY RATING DRIVERS

The affirmation of the rating reflects CNREF's highly experienced management and staff, sufficient servicing technology, appropriate internal controls including at least annual internal audits, and the servicing group's integral role in the broader company. The rating also reflects key person risk given the small size of the group, some manual functions and proficiency servicing more complex, highly structured loans compared with highly-rated peers.

CNREF acts as a correspondent lender and servicer mainly for life insurance companies and U.S. Department of Housing and Urban Development (HUD) and commercial mortgage-backed securities (CMBS) lenders. As of Sept. 30, 2020, life company loans made up 89% of the total servicing portfolio by loan count, HUD loans made up 8% and CMBS loans made up 3%. CNREF, through predecessor companies, has extensive experience as a primary servicer, having serviced commercial mortgage loans since 1939. The company has limited experience with more complex, highly structured loans. CNREF sells the loans it originates for HUD and retains servicing for approximately 75% of originated loans.

The company maintains an experienced servicing management team as its two senior managers average 28 years of experience and 16 years of company tenure. The seven-servicing staff-level employees have strong average experience and tenure with 15 years of experience and 11 years with the company. Historically, CNREF has had stable operations with little turnover and in the past 12 months there was 12% overall turnover due to one employee departure. There was no employee turnover at the last review. Recent employee additions were in the asset management group as the company's limited subservicing portfolio continues to grow.

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