KBRA assigns preliminary ratings to Benchmark 2024-V10 CMBS

KBRA has assigned preliminary ratings to 13 classes of a significant CMBS conduit transaction, valued at $738.0 million, which is backed by 32 commercial mortgage loans secured by 100 properties. These properties are distributed across 18 metropolitan statistical areas (MSAs), with the largest concentrations in New York, Los Angeles, and Honolulu. The transaction features a diverse pool of property types, including mixed-use, multifamily, office, and retail, with mixed-use properties making up the largest share. The loans within this pool vary in size, with principal balances ranging from $5.0 million to $73.5 million. The largest loan, BioMed 2024 Portfolio 2, accounts for 10.0% of the pool and includes several life science and office properties. The five largest loans collectively represent a significant portion of the initial pool balance, indicating a concentration of risk among a few key assets. KBRA's analysis involved a thorough evaluation of the underlying collateral properties, focusing on their financial and operational performance. This assessment led to an estimate of sustainable net cash flow (KNCF) that was notably lower than the issuer's cash flow projections. The capitalization rates applied to the KNCF resulted in values that were substantially below third-party appraisals, highlighting potential concerns regarding asset valuations. The pool's in-trust KLTV stands at 91.4%, while the all-in KLTV is 97.9%, suggesting a high level of leverage. The findings from this analysis will inform investors about the credit quality of the transaction and the associated risks, as well as the potential for future rating adjustments based on performance and market conditions.