Commercial v Resi: Asset Manager's multi-service offering

Commercial v Resi: Asset Manager's multi-service offering


Back in February, B&C reported that Oakwood Global Finance LLP had made a bold move into the commercial sector. Already working in the residential market as a mortgage servicer on behalf of funding providers, Oakwood’s expansion into the Commercial Real Estate (CRE) arena offers them the opportunity to target a brand-new market. We spoke to Emily Hadley, who was recently appointed to head up the CRE Loan Servicing division, to find out how the company’s move into commercial is progressing...

Oakwood has a lot of experience in the residential market – how will your loan servicing business be adapted to suit the commercial sector?

Oakwood believes in servicing loan accounts on a case-by-case basis, and one of our competitive advantages has always been our emphasis on recruiting, training and retaining the top people.

As a servicer of distressed loans, our objective is to work with our borrowers to maximise recoveries for the lenders we represent. In this new venture we will take on a new challenge, managing two new sets of party interests.

What are the major differences between the two areas?

In the residential market we deal with homeowners – helping individuals to resolve their financial affairs in order to deliver receivables to our investor/lender clients. In commercial transactions, maintaining or enhancing property cash-flow is our top priority, as this is the key driver of recoveries for our lenders. Our approach to debt recovery is therefore based on analysis of key performance drivers at the property-level, a comprehensive understanding of the transaction structure and experience managing the competing interests of various stakeholders in the transaction. To support this work, our technological and procedural infrastructure is being adapted to the commercial market, which will be an ongoing process as our CRE offering grows.

What inspired Oakwood’s launch into the commercial side, and how long has this been planned?

Over the next three years we expect a surplus of commercial real estate loans to mature and require refinancing. CRE represents one of the largest asset classes in the debt trading space and this opportunity will allow us to lend our special servicing expertise to existing participants and new entrants to the CRE debt market.

The company has always championed experience at the forefront of any hiring criteria, what is your background and how did you come to join Oakwood?

Over the years, I have worn many hats in commercial real estate, which gives me a good sense of perspective in these transactions. I started my career as an asset manager of commercial properties at Blackrock, so I understand how property owners think and how the underlying real estate works. I then moved to Blackrock’s CRE debt team, where I learned how to think like a lender, particularly those who are willing to take more credit risk for higher yields.   Those skills were really put to the test when I entered the servicing business at Hatfield Philips International (HPI) and the aftershocks of Lehman’s bankruptcy and the credit crunch started to be felt.

At HPI, I was on the front lines of the first Four Seasons Healthcare restructuring, one of the first large CMBS transactions to default. Finally, I led the special servicing team at Barclays Capital Mortgage Servicing, managing distressed loans in the Eclipse programme, like Keops and Neumarkt, which gave me considerable insight into the specific concerns of the banks who originated these transactions. 

For me, building a business to meet the demands of the commercial NPL market was a logical next step, and Oakwood has considerable experience pricing and managing loan portfolios. Given my broad range of experience on commercial transactions and Oakwood’s existing NPL capabilities, I feel confident that my appointment will complement Oakwood’s business.

What makes the company different to other loan service providers?

The investor base for residential and commercial NPL is largely the same; however, there are not many servicers in the market that offer both residential and commercial servicing capabilities to both types of investors.  In this respect, we have a very clear advantage. 

Oakwood has also developed “best-in-class” risk management systems to meet the exacting standards of the FSA on the residential side of the business. Much of this existing infrastructure can be modified to meet the demands of CRE servicing and even enhance the efficiency and quality of service we provide to our investors. This includes a dedicated technology team to develop and support the IT systems we use to manage large, granular loan portfolios. The heterogeneous nature of commercial loans presents its own challenges in this respect, but we have the right team to develop the systems and solutions to meet the challenge. 

Finally, we often co-invest a small proportion of our own money into loan portfolios alongside our clients. This ensures that our interests are aligned with the interests of the investor, as we have a personal stake in the end result.

How have the services Oakwood offers changed and adapted since the start of the economic crisis?

Our success in recent years is due to our special servicing capability. Lenders and investors need experienced professionals to manage the more complex and sensitive aspects of mortgage servicing to mitigate losses. These services include management of collections, arrears and repossession strategies.

The economic crisis prompted a number of originators and holders of mortgage portfolios to sell their mortgage holdings and reconsider their strategies because residential mortgage lending was not part of their long term strategy. By working with our investor partners we were able to facilitate these sales and broaden our expertise.

We are confident that bringing the same approach to a similarly-affected CRE market will also be a success.

Do you have any plans for further expansion or development of the company’s existing offerings?

We continue to see growth in our existing offerings and in other geographical jurisdictions within the Eurozone, particularly Spain and Ireland.

Commercial and residential mortgage portfolio trading is active in other market sectors and we will continue to have conversations in these areas as we see an increasing demand for specialist servicers.

Leave a comment