Fitch Affirms Unison Ground Lease Funding Series 2013-1 and 2013-2
--\\$98,000,000 class 2013-1 A at 'Asf'; Outlook Stable;
--\\$31,000,000 class 2013-1 B at 'BB-sf'; Outlook Stable;
--\\$13,600,000 class 2013-2 A at 'Asf'; Outlook Stable;
--\\$4,400,000 class 2013-2 B at 'BB-sf'; Outlook Stable.
The certificates represent beneficial ownership interest in the trust, primary assets of which are 1,056 cellular sites securing one fixed-rate loan. As of the October 2015 distribution date, the aggregate principal balance of the notes remains unchanged at \\$147 million since issuance. The notes are interest only for the entire seven-year period.
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. 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.
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.
As part of its review, Fitch analyzed the collateral data and site information provided by the issuer, MelTel Land Funding LLC. As of Oct. 15, 2015, aggregate revenue increased 11.8% since issuance to \\$20.3 million. The Fitch stressed debt service coverage ratio (DSCR) increased from 1.24x at issuance to 1.40x as a result of the increase in net cash flow.
The ownership interests in the sites consist of 48.1% of revenue in perpetual easements and 47.6% in limited term easements. The limited term easements are generally long term with an average remaining term in excess of 40 years.
RATING SENSITIVITIES
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.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
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