Special Servicing Units Look Like Good Buys

NEW YORK CITY-It’s no secret that the special servicing business is booming. The amount of CMBS loans in such care—penciling in at $43 billion at the end of January—has doubled in the past year alone, according to Fitch Ratings. Special servicing, which generates management and resolution fees, can be quite a lucrative business. And that fact was probably not lost on locally based Island Capital Group, which picked up Centerline Capital Group’s special servicing arm yesterday. The deal represents the second such buy in the past year, and industry observers suspect it will not be the last.

“The whole special servicing landscape is going to change this year, whether that’s through consolidation or the purchase of existing servicers,” said Stephanie Petosa, a senior analyst at Fitch, in an interview with GlobeSt.com last week.

Island Capital’s buy comes three months after Warren Buffet’s Berkshire Hathaway Inc. and Leucadia National Corp. made a $458-million play for Capmark Financial Group Inc.’s loan servicing and mortgage lending business, now known as Berkadia Commercial Mortgage. The deal emerged shortly after Capmark filed for Chapter 11 bankruptcy protection in October 2009.