NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned the following ratings and Rating Outlooks to Unison Ground Lease Funding Notes Series 2013-1 and 2013-2:
--$98,000,000 class 2013-1 A 'Asf'; Outlook Stable;
--$31,000,000 class 2013-1 B 'BB-sf'; Outlook Stable.
The following classes are being issued but are not rated by Fitch:
--$13,600,000 class 2013-2 A;
--$4,400,000 class 2013-2 B.
The $147 million Unison Ground Lease Funding notes are backed by 612 cellular tower sites with 642 structures leased to 784 cellular tower tenants. The notes are interest-only until the anticipated repayment date (ARD). Security for the notes includes mortgage liens on sites representing approximately 95% of the annualized run rate net cash flow (NCF) and a pledge and first-priority perfected security interest in 100% of the equity interest of the issuer and the asset entities and is guaranteed by the direct parent Unison Holdings, LLC (Unison).
The ownership interest in the cellular sites consists of perpetual easements, long-term easements, prepaid leases, 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
High Leverage: Fitch's estimate NCF on the pool is $11.15 million, implying a Fitch stressed debt service coverage ratio (DSCR) of 1.22x. The debt multiple relative to Fitch's NCF is 8.60x, which equates to a debt yield of 11.6%.
Long-Term Easements: The ownership interests in the sites consist of 92.5% perpetual/long-term (30+ years) easements, 5.7% limited-term easements (less than 30 years), and 1.9% fee.
Prefunding: On the closing date, approximately 24% of the rated proceeds were deposited into a site acquisition account to be used by Unison to acquire additional cellular sites during the 12-month acquisition period. 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 to gain comfort with Unison's origination practices. Additionally, the servicer of this transaction will be performing certain recalculation of prefunding requirements outlined in the documents.
RATING SENSITIVITIES
Fitch performed several stress scenarios in which the Fitch NCF was stressed. Fitch determined that a 55.8% 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 class 2013-1 A ratings and determined that a 9% decline in NCF would result in a one-category downgrade to 'BBBsf', while a 22% decline would result in a downgrade to below investment grade. Rating sensitivity was also performed for the class 2013-1 B notes and an 8% decline in NCF would result in a one-category downgrade to 'B-sf', while a 9% decline would result in a downgrade below 'CCCsf'. The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities.
The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria'(June 6, 2012);
--'Criteria for Analyzing U.S. Wireless Tower Transactions' (Dec. 4, 2012);
--'Criteria for Special-Purpose Vehicles in Structured Finance Transactions'(May 30, 2012).
Applicable Criteria and Related Research
Criteria for Special-Purpose Vehicles in Structured Finance Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=680591
Criteria for Analyzing U.S. Wireless Tower Transactions
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696123
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679923
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