In an effort to enhance its commercial mortgage servicing
business, KeyBank Real Estate Capital - a Commercial Real Estate
Business unit of
) - entered into a series of agreements. These include a deal
Bank of America Corporation
) to buy commercial mortgage servicing rights from the latter.
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KeyCorp is set to acquire Commercial Mortgage Servicing Rights
(CMBS) and special servicing rights from the Global Mortgage
& Securitized Products portfolio of BofA, which provides
services to a diversified group of private investors. The
transaction comprises CMBS and special servicing portfolio worth
approximately $14 billion. The transaction is scheduled for
completion in the second quarter of 2013.
BofA's total commercial mortgage servicing portfolio is worth
$110.5 billion as of Mar 31, 2013. However, it is anticipated
that the Commercial Real Estate Banking portfolio of BofA will
remain unaffected due to the acquisition.
Following the deal, KeyCorp's commercial mortgage servicing
portfolio is expected to be listed among the top three largest
servicers of commercial or multifamily loans in the U.S.
Moreover, KeyCorp's servicing portfolio will be worth $205
billion, comprising approximately $14 billion in special
Concurrently, KeyCorp entered into an agreement with Berkadia
Commercial Mortgage LLC. As per the deal, Berkadia consented to
act as a sub-servicer on the entire CMBS primary servicing
purchased by KeyCorp from BofA. Additionally, KeyCorp agreed to
buy the CMBS special servicing portfolio of Berkadia.
The strategic deals with BofA and Berkadia are expected to auger
well for Keycorp. Alongside, the company is expected to be named
special servicer on about $47 billion of CMBS on a pro forma
basis. This will position it as the fifth largest CMBS special
servicer. However, the agreements with BofA and Berkadia are
subject to the approval of rating agencies, regulators and
KeyCorp carries a Zacks Rank #3 (Hold). Stocks that are
performing well and are worth considering include
Fifth Third Bancorp
State Street Corporation
), which carry a Zacks Rank #2 (Buy).