A commercial mortgage backed security (CMBS) is being prepped for $1.3 billion, according to a presale Fitch Ratings released April. 1.  

Barclays Capital and Deutsche Bank Securities are jointly arranging the deal. The originator is, ultimately, SBA Communications Corporation.

The deal is distributed among three tranches. Based on preliminary information, there is a $400 million piece Fitch rated ‘Asf’ with a legal final of 30 years; a $600 million chunk also  rated ‘Asf’ with a legal final of 35 years; and, finally, a $330 million piece rated ‘BBBsf’ with a legal final of 25 years.

The deal is backed by mortgages representing more than 95% of the annualized run rate (ARR) net cash flow (NCF) and guaranteed by the borrowers’ direct parent. The borrowers own or lease 8,830 wireless communication sites.

These sites have, in total, 20,420 wireless tenant leases. “Telephony tenants represent 96% of the leases and 56% of the annualized run rate revenue (ARRR) is from investment-grade tenants,” Fitch said.

The major tenants are unsurprisingly Sprint, AT&T, T-Mobile, and Verizon.

The deal has full title insurance coverage, but the rating agency pointed out that the issuer is amending the documents to remove the requirement for title insurance on future transactions. If other mitigants aren’t in place, Fitch may decide to downgrade existing deals off this structure that are pari passu with future financings.

Despite the massification of cell phone usage in the U.S., the length of the notes carries a degree of obsolescence risk, as a new competing technology could years from now spell doom for wireless communication.

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