Insight Wireless Group is issuing another $301.5 million of notes backed by cellular towers, according to rating agency presale reports.
The transaction will bring total issuance from the sponsor’s Secured Cellular Site Revenue Notes master trust to $476.9 million. The initial offering of $175.4 million was completed in 2013.
The notes are collectively backed by mortgaged cellular sites representing approximately 80% of Insight’s annualized run rate net cash flow and are guaranteed by the direct parent of the co-issuers. There are 1,196 tower sites and 19 DAS sites spanning 46 states, Canada (145 sites), the U.S. Virgin Islands (eight sites) and Puerto Rico (52 sites). The largest state, Texas, represents approximately 11.8% of the annualized run rate, so the deal is geographically diverse. These sites have 2,800 tenant leases, with telephony and data tenants represent 73.7% of the annualized run rate revenue and investment grade tenants representing 58%.
Tenant leases on the cellular sites have average annual escalators of approximately 3.0% and an average final remaining term (including renewals) of 22 years.
Among other credit considerations, approximately 10.4% of total proceeds ($50 million) will be used o acquire additional cellular sites during the 12-month acquisition period. Fitch noted in its presale report that prefunding introduces uncertainty as to final collateral characteristics.
The senior, $121.8 million tranche of notes maturing in 2023 is provisionally rated single-A by Fitch Ratings and Kroll Bond Rating Agency. It benefits from credit enhancement of 30.3%. There are also five tranches of subordinate notes with ratings ranging from
At closing, issuance proceeds will be used to repay certain outstanding debt obligations and for general corporate purposes.
The transaction also allows for the issuance of additional notes that may rank senior to, pari passu with or subordinate to the 2013 and 2016 notes.