Private equity firms Apollo Global Management and Centerbridge Capital Partners have made competing bids for CW Financial Services, the parent firm of US special servicer CWCapital, according to a report by Bloomberg.
Warren Buffet’s Berkshire Hathaway Inc. and Leucadia National Corp., which recently teamed up to buy Capmark Financial’s servicing and mortgage business, is also reportedly weighing a bid for CW. Bloomberg cited unnamed people familiar with the matter.
CWCapital and CWAsset Management is the second largest special servicer in the US, according to the Mortgage Bankers Association, dealing with almost 13,000 CMBS, CDO and other asset-backed mortgages worth more than $162 billion, as of the end of 2009. 
Special servicers are expected to struggle against a wave of CMBS defaults over the coming years, with data provider Trepp this week warning that more than 3,500 CMBS loans in the US, valued at $38.9 billion, had a debt service coverage ratio of 1.0x or below.
One of its largest – and most high-profile – loans is the $3 billion Stuyvesant Town/Peter Cooper Village securitised senior mortgage, which was handed over to CWCapital by borrowers Tishman Speyer and BlackRock Realty after they defaulted on a monthly debt payment.
The largest special servicer in the US is LNR Partners representing $191 billion of loans as of the end of 2009, while Centerline Servicing is third with $108 billion of loans.
The Bloomberg report said the CW Financial auction was being run by Beekman, with the firm expected to fetch more than $200 million. Canadian pension fund, Caisse de dépôt et placement du Québec, through its subsidiary Otéra Capital, is a majority owner in CW. Bloomberg quoted Francois Gaboury, a spokesman for Otéra, as saying: “The sale is in process and we have no announcement at this time.”
In January, Bloomberg reported that LNR Partners’ parent, LNR Property, had hired Lazard and law firm Dewey LeBeouf to help it restructure as much as $1 billion of debt and prepare for a possible bankruptcy filing.
Special servicers in particular are expected to struggle against a wave of CMBS defaults over the coming years, with data provider Trepp this week warning that more than 3,500 CMBS loans in the US, valued at $38.9 billion, had a debt service coverage ratio of 1.0x or below. That figure was extracted from the 2009 financial reports of more than 26,000 CMBS conduit deals. However, Trepp said just 41 percent of the CMBS universe had reported their year-end financials to date, meaning there could be a total of $75 billion of loans with a 1.0x DSCR or less needing the attention of special servicers in the coming months and years.
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