Morningstar DBRS Finalizes Provisional Credit Ratings on BWAY Trust 2025-1535

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

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

All trends are Stable.

Morningstar DBRS discontinued and withdrew its provisional rating on the Class X Certificates initially contemplated in the offering documents, as they were removed from the transaction.

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, 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 the location being in Times Square, which has the highest pedestrian foot traffic in New York City. The area features flagship retail stores, experiential retail attractions, and the New York City Theatre District, which includes 41 professional theatres. The retail portion 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 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 product, 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 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 they acquired the retail and signage. 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 their 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 rated classes.

Morningstar DBRS' credit ratings do 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 Yield 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. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) 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) https://dbrs.morningstar.com/research/437781

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 US dollars unless otherwise noted.

The principal methodology is North American Single-Asset/Single-Borrower Ratings Methodology (February 28, 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.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
22 West Washington Street
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 03, 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.