Fitch to Rate SBA Tower Trust Series 2016-1C; Presale Issued

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has issued a presale report on SBA Tower Trust Secured Tower Revenue Securities series 2016-1C.

Fitch expects to rate the transaction and assign Rating Outlooks as follows:

--$700,000,000 class 2016-1C 'Asf'; Outlook Stable.

The expected rating is based on information provided by the issuer as of May 31, 2016. The 2016-1C class is pari passu with the 2012-1C, 2013-1C, 2013-2C, 2014-1C, 2014-2C, and 2015-1C classes.

The transaction is an issuance of securities backed by a mortgage loan secured by the borrowers' mortgage liens in tower sites representing approximately 96% of the aggregate allocated loan amount and guaranteed by the direct parents of the borrowers. The guarantee is secured by a pledge and first-priority perfected security interest in 100% of the equity interest of the borrowers (which own or lease 10,544 wireless communication sites) and certain guarantors. The new series of securities will be issued pursuant to a supplement to the amended and restated trust and servicing agreement and the mortgage loan will be increased pursuant to a supplement to the amended and restated loan and security agreement.

The ratings reflect a structured finance analysis of the cash flows from the ownership interest in cellular sites, not an assessment of the corporate default risk of the ultimate parent, SBA Communication Corporation (SBA).

KEY RATING DRIVERS

Trust Leverage: Fitch's net cash flow (NCF) on the pool is $633 million, indicating a Fitch stressed debt service coverage ratio (DSCR) of 1.46x. The debt multiple relative to Fitch's NCF is 7.39x, which equates to a debt yield of 13.5%. The $4.35 billion 'Asf' rated securities have a Fitch stressed DSCR, debt multiple and debt yield of 1.57x, 6.87x, and 14.6%, respectively.

Leases to Strong Tower Tenants: There are 22,425 wireless tenant leases. Telephony tenants represent approximately 97% of the annualized run rate revenue and 56% of ARRR is from investment-grade tenants. The tenant leases have weighted average annual escalators of approximately 3.6% and a weighted average final remaining term (including renewals) of 17.8 years. The largest tenant, AT&T (36.4% of ARRR) is rated investment grade by Fitch (Long-Term IDR 'A-'/Stable Outlook).

RATING SENSITIVITIES

Fitch performed several stress scenarios in which Fitch's NCF was stressed. It was determined that a 76% 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 for class 2016-1C, and a 10% decline in NCF would result in a one-category downgrade, while a 27% decline would result in a downgrade to below investment grade. The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities.

Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.

DUE DILIGENCE USAGE

Fitch was provided with third-party due diligence information from Deloitte & Touche LLP and Ernst & Young LLP. The third-party due diligence information was provided on Form ABS Due Diligence Form-15E and focused on a comparison of certain characteristics with respect to the portfolio of wireless communication sites and related tenant leases in the data file. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis. Copies of the ABS Due Diligence Forms-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary (RAC).

Additional information is available at www.fitchratings.com.

SBA Tower Trust (US CMBS)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883009

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

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1006168

ABS Due Diligence Form 15E 1

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=1006168&flm_nm=15e_1006168_1.pdf

ABS Due Diligence Form 15E 2

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=1006168&flm_nm=15e_1006168_2.pdf

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1006168

Endorsement Policy

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

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160616006084/en/

Fitch Ratings
Primary Analyst
David Ro
Director
+1-312-368-3132
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Adam Ott
Director
+1-312-368-2094
or
Committee Chairperson
Lauren Cerda
Senior Director
+1-312-606-2317
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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