BANK5 2024-5YR5 is preparing to bring a commercial mortgage-backed securities conduit transaction to market, to sell $518.6 million in notes secured by 24 loans on 25 properties.
Some 21 sponsors are on the transaction, and some 42.4% of the underlying loans are financing retail properties, according to ratings analysts at Kroll Bond Rating Agency. Office properties account for the next highest concentration, 17.6%, and properties classified as "other" make up 16.5% of the deal, according to KBRA. A plurality of the underlying loans in the pool, 42.2%, are located in 2A real estate markets, and 1A is next-largest market tier represented in the pool, according to the rating agency.
The trust will issue sixteen classes of certificates to investors, KBRA said, and certificate holders in 11 of those will be entitled to principal and interest, according to analysts. BofA Merrill Lynch, J.P.Morgan Securities, Morgan Stanley & Co. and Wells Fargo Securities are managers on the deal, which has a February 14 closing date, according to Asset Securitization Report's deal database.
On a weighted average basis the loans have a 7.03% coupon and a remaining term of 4.9 years. All 24 loans are full-term, interest-only loans, according to the rating agency. KBRA says the loans have a capitalization rate of 8.96%.
The A2 through XA notes will receive AAA ratings from KBRA, Fitch Ratings and Moody's Investors Service, according to ASR's deal database. After those tranches, only Fitch and KBRA rated tranches XD through HRR, an those classes largely received ratings of BBB+ through B-.
A senior-subordinate structure will shore up the notes' credit quality, according to KBRA. KBRA notes that by its estimation the pool has a WA, in-trust, loan-to-value (KLTV) ratio of 82.5%, the fourth-lowest figure relative to the 28 CMBS conduits that KBRA has rated over the last 12 months, the rating agency said.
Although a significant portion of the deal is rated AAA, KBRA did notice that the ratings distribution on the underlying loans gave the pool a barbell characteristic. Credit bar-belling tends to create an uneven distribution of risk, where higher KLTV outliers generate losses that lower losses on the lower leveraged outliers.
