Welcome!

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
DX World EXPO, LLC, a Lighthouse Point, Florida-based startup trade show producer and the creator of "DXWorldEXPO® - Digital Transformation Conference & Expo" has announced its executive management team. The team is headed by Levent Selamoglu, who has been named CEO. "Now is the time for a truly global DX event, to bring together the leading minds from the technology world in a conversation about Digital Transformation," he said in making the announcement.
"Space Monkey by Vivent Smart Home is a product that is a distributed cloud-based edge storage network. Vivent Smart Home, our parent company, is a smart home provider that places a lot of hard drives across homes in North America," explained JT Olds, Director of Engineering, and Brandon Crowfeather, Product Manager, at Vivint Smart Home, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Conference Guru has been named “Media Sponsor” of the 22nd International Cloud Expo, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. A valuable conference experience generates new contacts, sales leads, potential strategic partners and potential investors; helps gather competitive intelligence and even provides inspiration for new products and services. Conference Guru works with conference organizers to pass great deals to gre...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
Companies are harnessing data in ways we once associated with science fiction. Analysts have access to a plethora of visualization and reporting tools, but considering the vast amount of data businesses collect and limitations of CPUs, end users are forced to design their structures and systems with limitations. Until now. As the cloud toolkit to analyze data has evolved, GPUs have stepped in to massively parallel SQL, visualization and machine learning.
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
Widespread fragmentation is stalling the growth of the IIoT and making it difficult for partners to work together. The number of software platforms, apps, hardware and connectivity standards is creating paralysis among businesses that are afraid of being locked into a solution. EdgeX Foundry is unifying the community around a common IoT edge framework and an ecosystem of interoperable components.
"ZeroStack is a startup in Silicon Valley. We're solving a very interesting problem around bringing public cloud convenience with private cloud control for enterprises and mid-size companies," explained Kamesh Pemmaraju, VP of Product Management at ZeroStack, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Large industrial manufacturing organizations are adopting the agile principles of cloud software companies. The industrial manufacturing development process has not scaled over time. Now that design CAD teams are geographically distributed, centralizing their work is key. With large multi-gigabyte projects, outdated tools have stifled industrial team agility, time-to-market milestones, and impacted P&L stakeholders.
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Enterprises are adopting Kubernetes to accelerate the development and the delivery of cloud-native applications. However, sharing a Kubernetes cluster between members of the same team can be challenging. And, sharing clusters across multiple teams is even harder. Kubernetes offers several constructs to help implement segmentation and isolation. However, these primitives can be complex to understand and apply. As a result, it’s becoming common for enterprises to end up with several clusters. Thi...