OREANDA-NEWS. Fitch Ratings affirms InSite Wireless Group, LLC's secured cellular site revenue notes, series 2013-1 as follows:

--$122.3 million 2013-1 class A at 'BBBsf'; Outlook Stable;

--$39.6 million 2013-1 class B at 'BB-sf'; Outlook to Positive from Stable.

Fitch does not rate the $14 million 2013-1 class C notes.

KEY RATING DRIVERS

The affirmations are the result of the cash flow growth since issuance due to the following: contractual rent bumps; additional leases; and acquisition of additional tower sites (with associated tenant leases) via the site acquisition account (prefunding). As of the July 2016 remittance, the reported net cash flow (NCF) was $25.9 million, which includes cash flow from the acquired sites, an increase of 5.7% from the same period a year prior.

As part of its analysis, Fitch received a June 2016 data file with site and tenant information. As of the June data file, the pool consisted of 663 sites with 1,622 tenant leases. Fitch modeled similar assumptions regarding the pool as at issuance. This resulted in a haircut of approximately 9.4% to the issuer NCF. Telephony/broadband tenants represented over 75% of the annualized run rate revenue (ARRR). There are 79 sites located in Canada; however, there is no currency swap in place for this transaction. Similarly to at issuance, Fitch applied a 25% additional stress to its NCF attributed to Canadian sites.

The collateral pool contains 16 distributed antennae system (DAS) networks representing 12% of the ARRR with 49 tenant leases. Similar to issuance, Fitch did not give credit the sites where InSite has a management contract to manage a DAS network owned by the DAS venue. Fitch limited modeled proceeds from the DAS networks to the 'BBsf' category (i. e. applied a 'BBsf' rating cap), based on the uncertainty surrounding the licensing agreements in a venue-bankruptcy scenario and the limited history of these networks.

RATING SENSITIVITIES

The Outlook on class A remains Stable, and the Outlook on class B is Positive. Although there is a potential for upgrade due to the cash flow growth and decrease in leverage, upgrades could be limited due to the allowance for additional notes, the specialized nature of the collateral and the potential for changes in technology to affect long-term demand for wireless tower space. Fitch does not foresee negative ratings migration unless a material economic or asset level event changes the transaction's portfolio-level metrics.

DUE DILIGENCE USAGE

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