Fitch to Rate SBA Tower Trust Series 2015-1C; Presale Issued
Fitch expects to rate the transaction and assign Rating Outlooks as follows:
--$500,000,000 class 2015-1C 'Asf'; Outlook Stable.
The expected ratings are based on information provided by the issuer as of Sept. 22, 2015. The 2015-1C class is pari passu with the 2010-2C, 2012-1C, 2013-1C, 2013-2C, 2014-1C and 2014-2C classes.
The transaction is an issuance of securities backed by a mortgage secured by the borrowers' mortgage liens in tower sites representing approximately 96% of the aggregate allocated loan amount, and guaranteed by the parent of the borrowers. Those guarantees are secured by a pledge and first-priority-perfected security interest in 100% of the equity interest of the borrowers (which own or lease 10,590 wireless communication sites) and subsidiary guarantors, if any. The new series of securities will be issued pursuant to a supplement to the amended and restated trust and servicing agreement and the mortgage will be increased pursuant to a supplement to the amended and restated mortgage loan.
The ratings reflect a structured finance analysis of the cash flows from the ownership interest in cellular sites, not an assessment of the corporate default risk of the ultimate parent, SBA Communication Corporation (SBA).
KEY RATING DRIVERS
Trust Leverage: Fitch's net cash flow on the pool is $610.4 million, implying a Fitch stressed debt service coverage ratio (DSCR) of 1.46x. The debt multiple relative to Fitch's net cashflow (NCF) is 7.42x, which equates to a debt yield of 13.5%. The $4.2 billion 'Asf' rated securities have a Fitch stressed DSCR, debt multiple and debt yield of 1.57x, 6.88x, and 14.5%, respectively.
Leases to Strong Tower Tenants: There are 22,642 wireless tenant leases. Telephony tenants represent approximately 97% of the leases on the cellular sites, and 55.3% of the annualized run rate revenue (ARRR) is from investment-grade tenants. The tenant leases have weighted average annual escalators of approximately 3.6% and a weighted average final remaining term (including renewals) of 18.2 years. The largest tenant, AT&T (36.5% of ARRR) is rated investment grade by Fitch (long-term IDR of 'A-' with a Stable Outlook).
Fitch performed several stress scenarios in which Fitch's NCF was stressed. Fitch determined that a 74.5% reduction in Fitch's NCF would cause the notes to break even at 1.0x DSCR on an interest-only basis.
Fitch evaluated the sensitivity of the ratings for class 2015-1C, and a 10% decline in NCF would result in a one-category downgrade, while a 29% decline would result in a downgrade to below investment grade. The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.
DUE DILIGENCE USAGE
Fitch was provided with third-party due diligence information from Deloitte & Touche LLP and Ernst & Young LLP. The third-party due diligence information was provided on Form ABS Due Diligence Form-15G and focused on a comparison of certain characteristics with respect to the portfolio of wireless communication sites and related tenant leases in the data file. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis. A copy of the ABS Due Diligence Form-15G received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary (RAC).