SYS-CON MEDIA Authors: Pat Romanski, Yeshim Deniz, Nikita Ivanov, Sean Houghton, Glenn Rossman

News Feed Item

Fitch Rates AP WIP Holdings, LLC Notes Maturing 2019 'BBBsf'

Fitch Ratings has assigned the following rating and Rating Outlook to AP WIP Holdings, LLC notes maturing 2019:

--$115,000,000 notes maturing 2019 'BBBsf'; Outlook Stable.

The ratings are based on information provided by the issuer as of Aug. 12, 2014.

The $115 million AP WIP Holdings, LLC loan maturing 2019 is backed by 630 wireless sites with 860 wireless tenant leases. Of the $115 million, $90 million is advanced at closing with an additional $25 million available to purchase eligible additional assets. The transaction is an issuance of notes backed by mortgages representing approximately 96% of the annualized net cash flow, a first priority perfected security interest in the personal property associated with the mortgaged sites, and a perfected security interest in the personal property and fixtures of the asset entities of the non-mortgaged sites. The transaction is structured as interest-only through the anticipated repayment date in 2019.

The ownership interest in the wireless sites consists of lease purchase sites, easements and fee interests in land, rooftops or other structures on which site space is allocated for placement of tower and wireless communication equipment.

KEY RATING DRIVERS

Cash flow and leverage: Fitch's net cash flow (NCF) on the pool is approximately $14.9 million (including prefunding), which is approximately 4.4% below the issuer's NCF, implying a Fitch stressed debt service coverage ratio (DSCR) of 1.37x including all potential future prefunding. Gross potential rents were determined on a tenant-by-tenant basis per Fitch's 'Criteria for Analyzing U.S. Wireless Tower Transactions'. The debt multiple relative to Fitch's NCF for the loan is 7.69x, which equates to a debt yield of 13%.

Leases to Strong Tower Tenants: There are 860 wireless tenant leases. Telephony tenants represent 99.5% of the leases on the cellular sites. AT&T (rated 'A', Outlook Negative by Fitch) and Verizon (rated 'A-') are the largest tenants, representing approximately 21% each of the total issuer cash flow. The tenant leases have average annual escalators of approximately 3.07%.

Reasonable Diversification: There are 630 sites spanning 50 states. The largest state (California) represents approximately 21.6% of issuer cash flow.

Loan secured by mortgages and first-priority security interests: The loan is secured by: perfected first mortgage liens on the interests of the asset entities in fee assets, ground leased assets, and other sites representing approximately 96.9% of the NCF from all such assets; and the equity interests of the issuers and each asset entity, as well as various transaction accounts and agreements. The security interests in the equity of the issuers and the asset entities provide noteholders with the ability to foreclose on the ownership of the issuers and the asset entities in addition to their assets pledged as collateral in the event of default.

Importance of Towers to Wireless Service Providers: Increased smartphone penetration and data usage have increased the need for cell towers. With wireless service providers (WSPs) moving to 4G networks, there is a need for additional towers, since 4G has a smaller range per WSP. The emergence of tablets and other devices adds additional demands for higher speeds and network build-outs.

Risk of Technological Obsolescence: The notes have a rated final payment date 25 years after closing, and the long-term tenor of the notes increases the risk that an alternative technology - rendering obsolete the current transmission of wireless signals through cellular sites - will be developed. Currently, WSPs depend on towers to transmit their signals and continue to invest in this technology.

Additional Notes: It is expected that the transaction will allow for the issuance of additional notes. Such additional notes may rank pari passu with or subordinate to the 2014 notes. The additional notes will be pari passu with and be rated the same as any class of notes bearing the same alphabetical class designation. Additional notes may be issued without the benefit of additional collateral, provided the post-issuance DSCR is not less than 2.0x. As Fitch monitors the transaction, the possibility of upgrades may be limited due to the provision that allows additional notes and cash flow deterioration.

Prefunding: It is expected that on the closing date, approximately 22% of the total rated proceeds can be used by AP to acquire additional cellular sites during the 12-month acquisition period via further advances as allowed under the loan agreement. Prefunding introduces uncertainty as to final collateral characteristics. Fitch accounted for prefunding by stressing the NCF of the prefunding component to reflect the most conservative prefunding pool composition tests. Fitch also performed an originator review including a site inspection to gain comfort with AP's origination practices. Additionally, the calculation agent, Deutsche Bank Trust Company Americas, will be performing certain recalculation of prefunding requirements outlined in the documents.

Structural Features: The transaction features an upfront reserve account with an initial balance of approximately $2.6 million. The reserve account thereafter has a minimum balance of $2.6 million, or six months interest payments, and is replenished. The transaction also features mandatory prepayments if the advances are greater than 7.75x the eligible free cash flow. This allows for the prepayment of the loan if sites become ineligible due to condemnation, concentration or missed payments (among other criteria). Site eligibility is outlined in the transaction documents. The calculation agent monitors the structural triggers on a monthly basis.

RATING SENSITIVITIES

Fitch performed several stress scenarios in which Fitch's NCF was stressed. Fitch determined that a 26.9% 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 and an 11.9% decline in NCF would result in a one-category downgrade to 'BBsf', while a 30.6% decline would result in a downgrade below 'CCCsf'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria'(May 24, 2013);

--'Criteria for Analyzing U.S. Wireless Tower Transactions' (Dec. 3, 2013).

Applicable Criteria and Related Research: AP WIP Holdings, LLC maturing 2019

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754056

Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Criteria for Analyzing U.S. Wireless Tower Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724675

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=849794

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...
Fundamentally, SDN is still mostly about network plumbing. While plumbing may be useful to tinker with, what you can do with your plumbing is far more intriguing. A rigid interpretation of SDN confines it to Layers 2 and 3, and that's reasonable. But SDN opens opportunities for novel constructions in Layers 4 to 7 that solve real operational problems in data centers. "Data center," in fact, might become anachronistic - data is everywhere, constantly on the move, seemingly always overflowing. Net...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
SYS-CON Media announced that Centrify, a provider of unified identity management across cloud, mobile and data center environments that delivers single sign-on (SSO) for users and a simplified identity infrastructure for IT, has launched an ad campaign on Cloud Computing Journal. The ads focus on security: how an organization can successfully control privilege for all of the organization’s identities to mitigate identity-related risk without slowing down the business, and how Centrify provides ...
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
There's Big Data, then there's really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at Big Data Expo®, Hannah Smalltree, Director at Treasure Data, discussed how IoT, Big D...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
In her General Session at 15th Cloud Expo, Anne Plese, Senior Consultant, Cloud Product Marketing, at Verizon Enterprise, focused on finding the right mix of renting vs. buying Oracle capacity to scale to meet business demands, and offer validated Oracle database TCO models for Oracle development and testing environments. Anne Plese is a marketing and technology enthusiast/realist with over 19+ years in high tech. At Verizon Enterprise, she focuses on driving growth for the Verizon Cloud platfo...
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrateg...
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
SYS-CON Events announced today that Gridstore™, the leader in hyper-converged infrastructure purpose-built to optimize Microsoft workloads, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Gridstore™ is the leader in hyper-converged infrastructure purpose-built for Microsoft workloads and designed to accelerate applications in virtualized environments. Gridstore’s hyper-converged infrastructure is the ...
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.