A pool of mortgages with five-year terms will serve as collateral for the BANK5 2023-5YR4, which will issue $744.1 million in mortgage pass-through certificates to investors.
A group of banks made up of Morgan Stanley Mortgage Capital Holdings, Wells Fargo Bank and JPMorgan Chase contributed the 27 interest-only loans that secure the collateral pool. The loans finance 63 commercial properties, and while Wells Fargo is expected to be master servicer on the deal, KeyBank will serve as special servicer, according to Fitch Ratings.
The transaction will issue notes from 14 tranches, 13 of which will receive ratings from Fitch with a stable outlook, and all of which have a legal final maturity date of December 2056, according to the rating agency.
Ratings range from 'AAA' on the class A-2-1 through class X-A notes; and 'AA-' on the class B notes through 'B-' on the class J-RR notes.
BANK5 already stands out from most standard conduit transactions, which have included mostly 10-year term loans. Based on Fitch's historical loan performance analysis, five-year loans show a modestly lower probability of default than 10-year loans. The pool is also more concentrated than recently rated Fitch transactions, with the 10 loans make up 66.5% of the pool. This is higher than the 2023 year-to-date average of 63.3% and the 2022 average of 55.2%.
The collateral loans have an average loan size of $27.6 million. On a weighted average (WA) basis the mortgages have a rate of 7.55%, a issuer debt service coverage ratio of 1.63x, and issuer capitalization rate of 6.50%.
Some 39.9% of the pool has pari passu participations, while single-tenant occupancy properties 14.1% of the pool funds single-tenant occupancy properties.
Morgan Stanley, Wells Fargo Securities, BofA Securities, J.P.Morgan Securities, Academy Securities, Drexel Hamilton and Siebert Williams Shank all serve as underwriters on the deal.
