Morningstar DBRS Confirms Credit Ratings on All Classes of ONNI Commercial Mortgage Trust 2024-APT

DBRS, Inc. (Morningstar DBRS) confirmed its credit ratings on the following classes of Commercial Mortgage Pass-Through Certificates, Series 2024-APT (the Certificates) issued by ONNI Commercial Mortgage Trust 2024-APT (the Trust):

-- Class A at AAA (sf)
-- Class B at AA (sf)
-- Class C at A (high) (sf)
-- Class D at BBB (sf)
-- Class E at BB (high) (sf)
-- Class HRR at BB (low) (sf)

All trends are Stable.

The credit rating confirmations reflect the overall stable performance of the transaction, which is early in its life cycle, having closed in July 2024. The transaction is secured by the borrower's fee-simple interest in eight Class A multifamily properties totaling 2,791 apartment units in Chicago, Los Angeles, and Long Beach, California.

Five assets, totaling 1,830 units, are in Chicago with the remaining 961 units in Los Angeles and Long Beach. All of the properties, which were developed between 2015 and 2023, are equipped with exceptional amenities including, but not limited to, resort-style pools, fitness centers, saunas, tenant lounges, and co-working spaces as well as modern condominium-quality finishes, making them some of the most premier rental units in their respective markets. The portfolio benefits from a unique product offering in the form of short-term rental units branded under the name Levels. These furnished multifamily units are generally leased on a short-term basis but can also be signed to long-term leases on a case-by-case basis. At issuance, it was noted that the sponsor operates 565 units under the Levels umbrella. Approximately 175,000 square feet (sf) of commercial space is 64.7% occupied as of the April 2025 rent roll, up from 57.4% at issuance. The sponsor intends to cover the projected tenant improvement allowances and leasing commissions associated with the commercial lease-up with funds held in a tenant reserve that, as of the June 2025 remittance, totaled $9.1 million.

Whole-loan proceeds of $875.0 million along with $125.0 million of mezzanine debt was used to refinance $930.5 million of debt across the portfolio, fund various reserves, and cover closing costs. The fixed rate loan is structed with a five-year term with no extension options. According to the YE2024 financial reporting, the property generated $77.2 million of net cash flow (NCF), resulting in a debt service coverage ratio (DSCR) of 1.40 times (x), compared with the issuance and Morningstar DBRS NCFs of $79.2 million (a DSCR of 1.44x) and $64.7 million (a DSCR of 1.17x), respectively. The slight decline in NCF is primarily due to a 5.6% increase in operating expenses with utilities and general and administrative costs being the main drivers. According to the April 2025 rent rolls, occupancy across the apartment units (excluding the furnished units) remains healthy, at more than 90.0%.

For this review, Morningstar DBRS maintained its collateral valuation of $1.0 billion derived at issuance based on a capitalization rate of 6.45% and the Morningstar DBRS NCF noted above, which represents a -33.8% variance from the issuance appraised value of $1.5 billion. The Morningstar DBRS loan-to-value ratio (LTV) is 87.2% compared with the LTV of 57.8% based on the appraised value at issuance when excluding mezzanine debt. In addition, Morningstar DBRS maintained positive qualitative adjustments totaling 6.25% to reflect the collateral's healthy performance and strong locations.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions' respective press releases at issuance.

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 (May 16, 2025) at https://dbrs.morningstar.com/research/454196.

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 CMBS Surveillance Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448963

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

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

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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 Single-Asset/Single-Borrower Ratings Methodology (February 28, 2025), https://dbrs.morningstar.com/research/448962

-- 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

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

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