Morningstar DBRS Confirms Credit Ratings on All Classes of JW Commercial Mortgage Trust 2024-MRCO

DBRS Limited (Morningstar DBRS) confirmed the credit ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2024-MRCO issued by JW Commercial Mortgage Trust 2024-MRCO:

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

All trends are Stable.

The credit rating confirmations reflect the stable performance of the transaction in the relatively short time since closing in June 2024.

The transaction is secured by the borrower's fee-simple interest in the JW Marriott Marco Island Beach Resort, encompassing 809 keys. The AAA Four Diamond luxury resort is on Marco Island, a barrier island on the southwest coast of Florida. The property comprises 747 guestrooms and 62 suites, including 695 keys in the Island and Palm Towers, 94 keys in the adults-only Lanai Tower, and 20 beachfront cottages. The collateral benefits from an extensive variety of amenities that drives both leisure and group travel demand to the property and allows for an easy shift in segmentation.

The property underwent a $337.8 million ($417,605 per key) capital expenditure program between 2015 and 2018 that encompassed the construction of Lanai Tower, which features 94 keys and approximately 120,000 square feet of meeting and event space along with extensive renovations to the rest of the property as part of the hotel's conversion from a Marriott to a JW Marriott. Over the next few years, the borrower is planning to complete further upgrades to the property through guestroom renovations for all 695 keys in the Island and Palm Towers and improvements to many of the amenities, based on a budget of $164.3 million outlined at issuance.

The transaction comprises a two-year interest-only (IO) floating-rate loan of $590.0 million that was used to repay $480.0 million of existing debt and return $101.0 million of equity to the sponsor. The loan is structured with three one-year extension options conditional on the purchase of an interest rate-cap agreement with a strike price that yields a per annum interest rate resulting in a minimum debt service coverage ratio (DSCR) of 1.15 times (x) for the extension term. The sponsor for this transaction is Barings, a global investment manager wholly owned by the Massachusetts Mutual Life Insurance Company.

According to YE2024 financial reporting, the collateral reported a net cash flow (NCF) of $74.1 million, resulting in a DSCR of 1.73x compared with the issuer's underwritten figure of $79.2 million (DSCR of 1.80x) and Morningstar DBRS' figure of $70.3 million (DSCR of 1.59x). Per the April 2025 STR report, the collateral's occupancy rate, average daily rate, and revenue per available room for the trailing 12-month period through March 31, 2025, were 80.3%, $483, and $388, respectively, compared with Morningstar DBRS' issuance figures of 80.9%, $491, and $397, respectively. Morningstar DBRS believes that the loan will continue to perform throughout the fully extended term based on the property's prime location combined with the recent and upcoming renovations.

For the purposes of this credit rating action, Morningstar DBRS maintained the valuation approach from issuance, which was based on a capitalization rate of 8.0% applied to the Morningstar DBRS NCF of $70.3 million. The resulting value of $878.2 million represents a variance of -10.5% from the issuance appraised value of $981.0 million and corresponds to a loan-to-value ratio (LTV) of 67.2%. Morningstar DBRS maintained positive qualitative adjustments of 7.0% to the LTV sizing benchmarks to account for the collateral's superior property quality, its strategic location within a market with numerous demand drivers and high barriers to entry, and historically stable performance.

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. 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 (May 16, 2025): 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 related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info-DBRS@morningstar.com.

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 Limited
DBRS Tower, 181 University Avenue, Suite 600
Toronto, ON M5H 3M7 Canada
Tel. +1 416 593-5577

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.

-- Interest Rate Stresses for U.S. Structured Finance Transactions (March 27, 2025): https://dbrs.morningstar.com/research/450750.

A description of how Morningstar DBRS analyzes structured finance transactions and how the methodologies are collectively applied can be found at (July 17, 2023): https://dbrs.morningstar.com/research/417279.

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