Studsvik's 3D, steady-state, nodal code SIMULATE5, which is widely used for square lattice geometries, has been recently extended to hexagonal geometry for the analysis of VVER 1000 and VVER 1200s. The lattice physics code CASMO5 is used for generating nodal cross sections data from single assembly calculations. SIMULATE5's HEX extension solves the multi-group diffusion equation, or optionally SP3 equations, for the hexagonal-z geometry by dividing each hexagonal into six triangles. In each triangle, the Fourier solution of the wave equation is approximated by eight plane waves to describe the intra-nodal flux accurately. The cross sections are described by a hybrid microscopic-macroscopic model that includes approximately 60 heavy nuclides and fission products. Heterogeneities, due to spacer/grid and control rod, in the axial direction of an assembly are treated systematically. This paper summarizes the physics models employed in SIMULATE5-HEX as well as the initial benchmarking activities.