BANK5 2024-5YR6 moves ahead with $984.3 million in CRE beneficial ownership certificates

The BANK5 Trust 2024-5YR6 is preparing to issue $984.3 million in certificates that represent beneficial ownership in a pool of 46 commercial real estate loans, mostly on retail properties.

JPMorgan Chase, Morgan Stanley Mortgage Capital Holdings, Wells Fargo Bank and Bank of America are sponsors, originators and mortgage loan sellers, according to Fitch. The capital structure calls for BANK5 Trust to issue class A through J notes through about 12 tranches. All the notes have a legal final maturity date of May 2057.

The class A1 and A3 notes benefit from credit enhancement of 30%, while the class AS notes have 18.2%, the rating agency said.

With a high proportion of fixed-rate, interest-only underlying loans, the notes have almost no amortization, according to analysts from Fitch Ratings. Forty-three of the loans are full interest-only loans and two of them are partial IO. These 43 loans total 94.5% of the pool's cutoff balance, the rating agency said.

Three loans in the pool have standalone, investment-grade opinions, including Kenwood Towne Centre, with BBB; Aliz Hotel Times Square, with A-; and Tysons Corner, which has a rating of AA, Fitch said.

Moody's Investors Service estimates that the notes have a debt service coverage ratio (DSCR) of 1.51x, which actually drops to 1.38x excluding the credit assessed loans, which is worse than the average ratio for transactions that it rated on a trailing four-quarter timeline that ended in Q4 2023, the rating agency said.

J.P.Morgan Securities, Morgan Stanley, Wells Fargo Securities, BofA Securities, Academy Securities and Drexel Hamilton are lead underwriters on the deal.

The loans are less concentrated and carry shorter durations than those that provided the assets for comparative U.S. private-label, multi-borrower, five-year deals, according to ratings analysts at Fitch Ratings. BANK5 Trust-2024-5YR6 is also more highly levered than similar transactions under Fitch Ratings' surveillance in 2023 and 2024. Ratings analysts say the assets have a loan-to-value (LTV) ratio of 93.6%, a higher level than the LTV averages of 89.7% and 89.1% in 2023 and 2024, respectively.

Moody's expects to assign ratings of Aaa to the A1 through A3-X2 notes; Aa2 to the A2 through AS-X2 notes.

Fitch assigns AAA to the A1 through As notes; AA- to the class B through X-B notes; BBB+ to the class D notes; BBB- to the class E notes; BB- to the class F notes; and B- to the class G notes.

KBRA assigns AAA to the class A notes; AA+ to the B notes; A+ to the class C notes and BBB+ to the D notes; BBB to the E notes; BBB- to the F tranche; BB+ to the G notes; and B+ to the H notes