OREANDA-NEWS. Fitch Ratings has affirmed all classes of Adams Outdoor Advertising Limited Partnership (LP) Secured Billboard Revenue Notes Series 2014-1. A detailed list of rating actions follows at the end of this release.

The transaction represents a securitization in the form of notes backed by over 11,000 available outdoor advertising faces and other advertising displays as of November 2015. The ratings reflect a structured finance analysis of the cash flows from advertising structures, not an assessment of the corporate default risk of the ultimate parent, Adams Outdoor Advertising (AOA). The transaction was structured with an upsize provision that allows classes A-1, B and C to increase to their maximum class amount indicated at issuance based on various factors including cash flow growth. AOA elected to upsize the transaction to the maximum class amount in 2015.

KEY RATING DRIVERS

Cash Flow and Leverage: Fitch's net cash flow (NCF) for the pool is $59.75 million as of November 2015, implying a Fitch stressed debt service coverage ratio (DSCR) of 1.52x. The debt multiple relative to Fitch's NCF is 7.7x, which equates to a debt yield of 13.0%.

High Barriers to Entry: AOA faces limited competition in its market as result of the billboard permitting process and significant federal, state and local regulations that limit supply and prohibit new billboards.

Notes Not Secured by Mortgages: The security interest is perfected by a pledge of the membership interests of the issuer and its subsidiaries and the filing of financing statements under the Uniform Commercial Code (UCC). The issuer filed UCCs on the permits and the advertising contracts. The security interest in the equity of the issuer provides the noteholders with the ability to foreclose on the issuer in an event of default. The lack of mortgages is mitigated in this transaction as the value of billboard assets is heavily dependent on non-mortgageable permits and licenses, which have been secured by UCC filings.

Issuance of Additional Notes: In addition to the upsize provision, AOA has the ability to issue additional notes in the future. However, additional issuance is subject to the following, among others: if additional billboard assets are being contributed to the trust, the pro forma interest-only (IO) DSCR after such issuance is not less than the IO DSCR before issuance and ratings confirmation is obtained; and if no additional billboard assets are being contributed to the trust, the pro forma IO DSCR after such issuance is not less than 2.25x. As Fitch monitors the transaction, the possibility of upgrades may be limited due to the provision that allows additional notes.