SBA Network Management, a leading independent owner and operator of wireless communications infrastructure across North America and Central America, has mandated Barclays to manage a sale of securities backed by wireless tenant lease payments.

A presale report published by Fitch Ratings sizes the deal at whopping $4 billion; however a person familiar with the transaction says that that just $1.5 billlion of securities will be issued.

Proceeds from the transaction, SBA Tower Trust Series 2014-1 and 2014-2, will be used to repay outstanding debt obligations and for general corporate purposes. SBA was last in the market in April 2013.

The securitized pool of 9,545 towers in this securitization represents approximately 43% of SBA’s total portfolio, according to Fitch's presale reprt. There are 21,418 wireless tenant leases. 

Fitch has applied its methodology for commercial mortgage bonds to the deal. However the transaction is structured similar to  other cell tower securitizations, with tenant leases as collateral, according to the person familiar with the deal.

AT&T represents the largest tenant comprising 34.2% of the ARRR. Fitch notes in the presale report that two other tenants, Deutsche Telekom AG and T-Mobile US, which make up 14.6% and 2.8% of the annualized revenue run rate (ARRR), recently announced a merger. Fitch applied an additional stress to sites where both tenants are co-located; the ratings agency calculated that in cases where leases are not renewed it could  resulting in approximately $3.3 million reduction in its stressed cash flow.

Fitch has assigned preliminary ‘A’ ratings to the class 2010- 2C, 2012-1C, 2013, 1C, 2013-2C, 2014-1C and 2014-2C notes. The rating agency expects to rate the 103-D notes ‘BBB’. The notes have a rated final payment date 30–35 years after closing and a weighted average tenor split between 5 and 10 years.

According to the presale report, the long-term tenor of the notes “increases the risk that an alternative technology — rendering obsolete the current transmission of wireless signals through cellular sites — will be developed.”

Cell tower ABS financing has become more attractive over the past year and pricing on deals compares favorably to other forms of wholesale lending, according to research published by Barclays this week. 

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