Mount Street LLP said it bought Morgan Stanley’s European real estate loan servicing business, boosting the amount the U.K. debt manager oversees to about 8 billion pounds ($13 billion).
Mount Street will take on 4.5 billion pounds of loans with its purchase of Morgan Stanley Mortgage Servicing, according to an emailed statement. Mount Street, founded last year by former Morgan Stanley bankers Ravi Joseph and Paul Lloyd together with Bill Sexton of Halverton Real Estate Investment Management LLP, will more than double its staff with the deal.
Loan servicers, which administer debt on behalf of banks and other lenders, are becoming increasingly important for investors in commercial mortgage-backed securities after a 40% peak-to-trough decline in values helped trigger a wave of defaults. Servicers can foreclose on loans or modify terms as they seek to maximize returns.
“The CMBS sector on the servicing side has been sleepy and under-served and many investors are keen to see some fresh energy come into the sector,” Mount Street’s chief executive Joseph said in a telephone interview.
Loans managed by the Morgan Stanley unit include the 429-million-pound securitized mortgage secured by London’s CityPoint building, which transferred to special servicing in 2012.