|By Business Wire||
|August 12, 2014 05:07 PM EDT||
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.
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
Global Structured Finance Rating Criteria - Effective from 20 May 2014 to 4 August 2014
Criteria for Analyzing U.S. Wireless Tower Transactions
After more than five years of DevOps, definitions are evolving, boundaries are expanding, ‘unicorns’ are no longer rare, enterprises are on board, and pundits are moving on. Can we now look at an evolution of DevOps? Should we? Is the foundation of DevOps ‘done’, or is there still too much left to do? What is mature, and what is still missing? What does the next 5 years of DevOps look like? In this Power Panel at DevOps Summit, moderated by DevOps Summit Conference Chair Andi Mann, panelists l...
Mar. 30, 2017 05:00 AM EDT Reads: 10,065
My team embarked on building a data lake for our sales and marketing data to better understand customer journeys. This required building a hybrid data pipeline to connect our cloud CRM with the new Hadoop Data Lake. One challenge is that IT was not in a position to provide support until we proved value and marketing did not have the experience, so we embarked on the journey ourselves within the product marketing team for our line of business within Progress. In his session at @BigDataExpo, Sum...
Mar. 30, 2017 04:45 AM EDT Reads: 3,330
Virtualization over the past years has become a key strategy for IT to acquire multi-tenancy, increase utilization, develop elasticity and improve security. And virtual machines (VMs) are quickly becoming a main vehicle for developing and deploying applications. The introduction of containers seems to be bringing another and perhaps overlapped solution for achieving the same above-mentioned benefits. Are a container and a virtual machine fundamentally the same or different? And how? Is one techn...
Mar. 30, 2017 04:45 AM EDT Reads: 3,312
Most companies are adopting or evaluating container technology - Docker in particular - to speed up application deployment, drive down cost, ease management and make application delivery more flexible overall. As with most new architectures, this dream takes a lot of work to become a reality. Even when you do get your application componentized enough and packaged properly, there are still challenges for DevOps teams to making the shift to continuous delivery and achieving that reduction in cost ...
Mar. 30, 2017 04:45 AM EDT Reads: 403
MongoDB Atlas leverages VPC peering for AWS, a service that allows multiple VPC networks to interact. This includes VPCs that belong to other AWS account holders. By performing cross account VPC peering, users ensure networks that host and communicate their data are secure. In his session at 20th Cloud Expo, Jay Gordon, a Developer Advocate at MongoDB, will explain how to properly architect your VPC using existing AWS tools and then peer with your MongoDB Atlas cluster. He'll discuss the secur...
Mar. 30, 2017 04:15 AM EDT Reads: 952
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor - all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
Mar. 30, 2017 04:15 AM EDT Reads: 2,248
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service.
Mar. 30, 2017 04:00 AM EDT Reads: 3,192
Niagara Networks exhibited at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
Mar. 30, 2017 03:45 AM EDT Reads: 3,455
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex softw...
Mar. 30, 2017 02:15 AM EDT Reads: 4,107
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
Mar. 30, 2017 01:30 AM EDT Reads: 2,627
What sort of WebRTC based applications can we expect to see over the next year and beyond? One way to predict development trends is to see what sorts of applications startups are building. In his session at @ThingsExpo, Arin Sime, founder of WebRTC.ventures, will discuss the current and likely future trends in WebRTC application development based on real requests for custom applications from real customers, as well as other public sources of information,
Mar. 30, 2017 01:15 AM EDT Reads: 1,238
DevOps tends to focus on the relationship between Dev and Ops, putting an emphasis on the ops and application infrastructure. But that’s changing with microservices architectures. In her session at DevOps Summit, Lori MacVittie, Evangelist for F5 Networks, will focus on how microservices are changing the underlying architectures needed to scale, secure and deliver applications based on highly distributed (micro) services and why that means an expansion into “the network” for DevOps.
Mar. 30, 2017 01:00 AM EDT Reads: 8,320
In his session at Cloud Expo, Alan Winters, an entertainment executive/TV producer turned serial entrepreneur, will present a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to max...
Mar. 30, 2017 12:45 AM EDT Reads: 714
Interoute has announced the integration of its Global Cloud Infrastructure platform with Rancher Labs’ container management platform, Rancher. This approach enables enterprises to accelerate their digital transformation and infrastructure investments. Matthew Finnie, Interoute CTO commented “Enterprises developing and building apps in the cloud and those on a path to Digital Transformation need Digital ICT Infrastructure that allows them to build, test and deploy faster than ever before. The int...
Mar. 30, 2017 12:30 AM EDT Reads: 1,539
China Unicom exhibit at the 19th International Cloud Expo, which took place at the Santa Clara Convention Center in Santa Clara, CA, in November 2016. China United Network Communications Group Co. Ltd ("China Unicom") was officially established in 2009 on the basis of the merger of former China Netcom and former China Unicom. China Unicom mainly operates a full range of telecommunications services including mobile broadband (GSM, WCDMA, LTE FDD, TD-LTE), fixed-line broadband, ICT, data communica...
Mar. 30, 2017 12:15 AM EDT Reads: 3,606