Fitch Affirms Unison Ground Lease Funding Series 2010-1 and 2010-2
--\$67,000,000 series 2010-1, class C at 'Asf'; Outlook Stable;
--\$87,500,000 series 2010-2, class C at 'Asf'; Outlook Stable;
--\$41,500,000 series 2010-2, class F at 'BBsf'; Outlook Stable.
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.
RATING SENSITIVITIES
Ratings on the classes are expected to remain stable based on continued cash flow growth due to annual rent escalations and automatic renewal clauses resulting in higher debt service coverage ratios since issuance. The ratings have been capped at 'A' due to the specialized nature of the collateral and the potential for changes in technology to affect long-term demand for wireless tower space.
The certificates represent beneficial ownership interest in the trust, primary assets of which are 1,515 wireless communication sites securing one fixed-rate loan. As of the March 2015 distribution date, the aggregate principal balance of the notes remains unchanged at \$196 million since issuance. The notes are interest only for the entire seven-year period for series 2010-1, Class C and 10 years for classes C and F of series 2010-2.
The ownership interest in the cellular sites consists primarily of perpetual and limited long-term easements of land, rooftops, or other structures on which site space is allocated to wireless service providers (WSP) and independent tower operators. Thus, unlike typical cell tower securitizations in which the towers serve as collateral, the collateral for this securitization generally consists of easements and the revenue stream from the payments the owner of the tower and/or tenants of the site pay to Unison.
As part of its review, Fitch analyzed the collateral data and site information provided by the master servicer, Midland Loan Services. As of March 31, 2015, aggregate TTM run rate net cash flow increased 17.3% since issuance to \$27.9 million. The Fitch stressed DSCR increased from 1.27x at issuance to 1.47x as a result of the increase in net cash flow.
The portfolio of sites are composed of ground easements, rooftops and structures which represent 54.9%, 36.2% and 8.9% of revenue respectively. Site concentrations are in-line with percentages of revenue at issuance.
The ownership interests in the sites consist of 68.8% of revenue in perpetual easements and 28.8% in limited term easements. The limited term easements are generally long term with an average remaining term in excess of 40 years.
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