Fitch Ratings downgrades Wells Fargo Commercial Mortgage Trust classes, cuts outlooks to negative

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Fitch downgrades Wells Fargo CMBS

Highlights

Fitch Ratings downgraded six classes and revised Outlooks to Negative on eight classes of Wells Fargo Commercial Mortgage Trust 2024-5C1, citing loan performance deterioration.
Falls Houston Multifamily Portfolio and Euclid Apartments, together representing 57% of expected pool losses, have suffered major occupancy drops and transferred to special servicing after default.
Fitch warns further downgrades are likely if property values decrease further or more loans transfer to special servicing, heightening risk for CMBS investors.

Multifamily loan stress drives rating action

As reported by Fitch Ratings, the agency has downgraded six classes and affirmed eight classes of Wells Fargo Commercial Mortgage Trust 2024-5C1, Commercial Mortgage Pass-Through Certificates Series 2024-5C1. The Outlooks on classes B, C and X-B are revised to Negative from Stable, while classes D, E, X-D, F and X-F are assigned Negative Outlooks following the downgrades.

The rating action reflects higher loss expectations, mainly linked to performance deterioration at two multifamily loans that account for 57% of expected pool losses, Falls Houston Multifamily Portfolio and Euclid Apartments. Fitch says both loans have transferred to special servicing and have recorded significant declines in value since issuance, with loan exposure continuing to rise after the transfers.

Property declines heighten risk for CMBS investors

The Falls Houston Multifamily Portfolio is the largest contributor to overall loss expectations in the pool. The loan is backed by three multifamily properties totaling 942 units in Houston, Texas, transferred to special servicing in July 2025 because of payment default, and became REO in August 2026.

The properties were built between 1970 and 1976, with renovations completed at Miami Gardens Apartments in 2011, Falls of Braeburn in 2018 and Chelsea Lane in 2019. As of August 2026, aggregate occupancy across the portfolio stands at 54.1%, with average in-place rents of $1,013 per unit.

Euclid Apartments is the second largest contributor to expected pool losses. The 738-unit multifamily property in Euclid, Ohio, transferred to special servicing in February 2025 due to payment default, and Fitch says major capital expenditures are needed to address life safety issues and meet local codes and regulations. Occupancy falls to 38% as of April 2026 from 95% at issuance.

Fitch says the Negative Outlooks reflect the potential for further downgrades if property values decline further or if additional loans move to special servicing. Future ratings are also influenced by any further deterioration in asset performance across the transaction.

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