Morningstar DBRS Assigns Provisional Credit Ratings to BWAY Trust 2025-1535

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the classes of commercial Mortgage-Pass Through Certificates, Series-1535 (the Certificates) to be issued by BWAY Trust 2025-1535 as follows:

--Class A at (P) AAA (sf)
--Class B at (P) AAA (sf)
--Class X at (P) AAA (sf)
--Class C at (P) AA (high) (sf)
--Class HRR at (P) AA (sf)

All trends are Stable.

The BWAY Trust 2025-1535 single-asset, single-borrower transaction is collateralized by the borrower's fee-simple interest in 1535 Broadway, a retail property with a theatre and a 330 foot wide, six-story LED sign. Located in Times Square, New York, the retail portion of the property features six suites and is 97.6% occupied. The collateral features one of the largest digital signs in Times Square and offers portions of the sign to retail tenants at the property. The theatre component of the property was constructed in 1986 and is managed by the Nederlander Organization (Nederlander), which manages most of the prominent Broadway theatres in New York.

The entire collateral benefits from its location in Times Square, which has the highest pedestrian foot traffic in New York City. The area features flagship retail stores and experiential retail attractions, and is part of the New York City Theatre District, which includes 41 professional theatres. The retail portion of the collateral benefits from the high foot traffic. Moreover, the area is generally seen as a 24/7 district and the retail stores like Sephora and Levi's are open daily from 9:00 a.m. to 11:00 p.m., instead of the typical opening hours of 10:00 a.m. to 6:00 p.m. Three of the five retail tenants face Broadway/7th Avenue, and Anita la Mamma Del Gelato is accessed on 45th Street. While all of the retail stores sell products, the location also serves as an advertising tactic because of the unique visibility of the asset.

The LED sign is 330 feet wide and six stories tall. The single screen is easily split to accommodate simultaneous advertisements. Three retail tenants¿Sephora, Switch, and T-Mobile¿have leases to the sign in connection with their lease to the retail space. Their combined sign income accounts for 21.0% of total revenue and 51.5% of the sign revenue. The remaining sign revenue is from a borrower-affiliate sublease and third-party revenue. While the sign is wholly owned by the sponsor, the income is received via a sublease that makes the income real estate investment trust (REIT)-friendly. The borrower is required by the loan documents to sign a 12-month lease for a minimum of $10.0 million. The third-party revenue is generated by advertisement contracts for a designated time slot. The sign is managed by Silvercast Media, which takes commission from the sales and manages the revenue across the sign.

The Marquis Theatre has 1,611 seats and is currently running "Stranger Things: The First Shadow." The theatre has also been home to "Elf: the Musical," "The Wiz," and "Beetlejuice The Musical" in recent years. The Marquis Theatre is connected to the Marriott Marquis hotel, which is not part of the collateral. The theatre and hotel were constructed simultaneously, but the theatre was renovated by the sponsor in 2014 when it acquired the retail and sign elements of the collateral. The theatre is managed by Nederlander, which manages historic theatres across 10 markets, including New York, London, and Chicago.

The sponsor for this transaction is Vornado Realty Trust (Vornado), which is one of the largest publicly traded REITs in the United States. Vornado reported approximately $950 million in cash and cash equivalents and $1.5 billion in additional liquidity as of December 31, 2024. The firm is an owner, manager, and developer of real estate, with the majority of its holdings in Midtown Manhattan.

Morningstar DBRS' credit rating on the Certificates addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related Principal Distribution Amounts and the Interest Distribution Amounts for the related classes.

Morningstar DBRS' credit rating does not address non-payment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, the credit ratings do not address Spread Maintenance Premiums.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781

Class X is an interest-only (IO) certificate that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All credit ratings are subject to surveillance, which could result in credit ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by Morningstar DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American Single-Asset/Single-Borrower Ratings Methodology (February 26, 2025) https://dbrs.morningstar.com/research/448962

Other methodologies referenced in this transaction are listed at the end of this press release.

With regard to due diligence services, Morningstar DBRS was provided with the Form ABS Due Diligence-15E (Form-15E), which contains a description of the information that a third party reviewed in conducting the due diligence services and a summary of the findings and conclusions. While due diligence services outlined in Form-15E do not constitute part of Morningstar DBRS' methodology, Morningstar DBRS used the data file outlined in the independent accountant's report in its analysis to determine the credit ratings referenced herein.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process. Please note a sensitivity analysis is not performed for CMBS bonds rated CCC or lower. The Morningstar DBRS Long-Term Obligation Rating Scale definition indicates that credit ratings of CCC or lower are assigned when the bond is highly likely to default or default is imminent, thereby prevailing over a sensitivity analysis.

DBRS, Inc.
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Chicago, IL 60602 USA
Tel. +1 312 332-3429

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

North American Commercial Mortgage Servicer Rankings (August 23, 2024)
https://dbrs.morningstar.com/research/438283

Morningstar DBRS North American Commercial Real Estate Property Analysis Criteria (September 19, 2024)
https://dbrs.morningstar.com/research/439702

Legal Criteria for U.S. Structured Finance (December 3, 2024)
https://dbrs.morningstar.com/research/444064

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.