Fitch Affirms Wireless Capital Partners LLC Series 2013-1 and 2013-2

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings for Wireless Capital Partners LLC secured wireless site contract revenue notes series 2013-1 and 2013-2. A full list of ratings follows at the end of this release.

KEY RATING DRIVERS

The affirmations are due to stable performance and continued cash flow growth since issuance. The Stable Outlooks reflect the limited prospect for upgrades given the provision to issue additional notes.

The certificates represent beneficial ownership interest in the trust, primary assets of which are 740 wireless sites securing one fixed-rate loan. As of the February 2016 distribution date, the aggregate principal balance of the notes has been reduced by 0.5% to $149.3 from $150 million since issuance.

The transaction is structured with scheduled monthly principal payments that will amortize down the principal balance 10% by the anticipated repayment date (ARD) in year seven, reducing the refinance risk. The scheduled monthly principal payments are paid sequentially beginning in the third year from closing until the note's ARD.

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. Unlike typical cell tower securitizations in which the towers serve as collateral, the collateral for this securitization generally consists of lease purchase sites, easements and the revenue stream from the payments the owner of the tower and/or tenants of the site pay to MelTel II Issuer LLC, formerly known as WCP Issuer LLC.

Fitch analyzed the collateral data and site information provided by the issuer, MelTel II Issuer LLC. As of February 2016, aggregate net cash flow increased 19.4% to $19.9 million since the issuance of the 2013-2 notes. The Fitch stressed DSCR increased from 1.23x at issuance to 1.47x as a result of the increase in net cash flow. Telephony/broadband tenants represented 96.6% of the annualized run rate revenue (ARRR).

MelTel II Issuer LLC, an affiliate of Melody Wireless Infrastructure, acquired Wireless Capital Holdings, LLC, the ultimate parent of WCP Guarantor LLC, now known as MelTel II Guarantor LLC, in January 2015. The manager was replaced by an affiliate of the new issuer.

Funds in the site acquisition account have been fully deployed after the acquisition of additional collateral during the acquisition period. The increase in revenue from the acquired sites exceeds the forecasted revenue underwritten at issuance as the revenue at issuance was stressed to the most conservative parameters to meet the pool composition tests outlined in the transaction documents.

RATING SENSITIVITIES

The Outlooks on all classes are expected to remain Stable. Downgrades are unlikely due to continued cash flow growth from annual rent escalations and automatic renewal clauses resulting in higher debt service coverage ratios (DSCR) since issuance. The ratings have been capped at 'A' and upgrades are unlikely due to the specialized nature of the collateral and the potential for changes in technology to affect long-term demand for wireless tower space.

DUE DILIGENCE USAGE

No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch has affirmed the following ratings:

--$94,370,000 class 2013-1A at 'Asf'; Outlook Stable;

--$31,000,000 class 2013-1B at 'BB-sf'; Outlook Stable;

--$17,880,000 class 2013-2A at 'Asf'; Outlook Stable;

--$6,000,000 class 2013-2B at 'BB-sf'; Outlook Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Analyzing U.S. Wireless Tower Transactions (pub. 19 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873961

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

Wireless Capital Partners, LLC -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718466

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999738

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999738

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160219005847/en/

Fitch Ratings
Primary Analyst
David Ro
Director
+1-312-368-3132
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Committee Chairperson
Mary MacNeill
Managing Director
+1-212-908-0785
or
Media Relations:
Hannah James, New York, + 1 646-582-4947
Email: [email protected]

Source: Fitch Ratings

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