Fitch Assigns Final Ratings to Landmark Infrastructure Series 2016-1

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings assigns ratings and Rating Outlooks to LMRK Issuer Co. LLC's Landmark Infrastructure Secured Tenant Site Contract Revenue Notes, Series 2016-1 as follows:

--$91,500,000 series 2016-1, class A, 'A-sf'; Outlook Stable;

--$25,100,000 series 2016-1, class B, 'BB-sf'; Outlook Stable.

Since Fitch published its expected ratings on May 13, 2016, the issuer removed the billboard site contracts from the trust and the balance of the class A certificates has decreased from $103,900,000 to $91,500,000 and the balance of the class B certificates has decreased from $29,200,000 to $25,100,000. The classes above reflect the final ratings and deal structure.

The transaction is an issuance of notes backed by mortgages representing not less than 95% of the annualized net cash flow and a pledge and a perfected first-priority security interest in 100% of the equity interest of the issuer and the asset entities and is guaranteed by the direct parent of LMRK Issuer Co. LLC (LMRK, or the issuer).

The ownership interest in the 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 and operation of wireless tower and wireless communication equipment.

The ratings reflect a structured finance analysis of the cash flows from the ownership interest in site assets, not an assessment of the corporate default risk of the ultimate parent.

KEY RATING DRIVERS

Trust Leverage: Fitch's net cash flow (NCF) on the pool is $12.5 million, implying a Fitch stressed debt service coverage ratio (DSCR) of 1.22x (inclusive of amortization credit). The debt multiple relative to Fitch's NCF is 9.4x, which equates to a debt yield of 10.7%.

Long-Term Easements: The ownership interests in the sites consist of 90.3% easements, 7.2% assignment of rents, and 2.5% fee. The weighted average remaining life of the ownership interest is 77.6 years (assumes 99 years for perpetual easements and fee sites).

Scheduled Amortization Paid Sequentially: The transaction is structured with scheduled monthly principal payments that will amortize down the principal balance 15% by the ARD in year five, reducing the refinance risk.

Leases to Strong Tower Tenants: There are 629 tenant leases located on 491 unique sites. Telecom tenants represent 100% of the leases on the sites and 57.9% of the revenue is from investment-grade tenants. T-Mobile is the largest tenant, representing approximately 19.2% of annualized revenue. The tenant leases have average annual escalators of 3% and a weighted average final remaining term (including renewals) of 21.3 years.

RATING SENSITIVITIES

Fitch performed several stress scenarios in which Fitch's NCF was stressed. Fitch determined that a 53% reduction in Fitch's NCF would cause the notes to break even at 1.00x DSCR on an interest-only basis.

Fitch evaluated the sensitivity of the ratings for series 2016-1 class A, and a 10% decline in NCF would result in a one-category downgrade, while a 15% decline would result in a downgrade to below investment grade. The Rating Sensitivity section in the presale report includes a detailed explanation of additional stresses and sensitivities.

Key Rating Drivers and Rating Sensitivities are further described in the presale report. The presale report is available to all investors on Fitch's web site 'www.fitchratings.com'.

DUE DILIGENCE USAGE

Fitch was provided with third-party due diligence information from Ernst & Young LLP. The third-party due diligence information was provided on Form ABS Due Diligence Form-15E and focused on a comparison of certain characteristics with respect to the portfolio of wireless communication sites and related tenant leases in the data file. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis. A copy of the ABS Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Analyzing U.S. Wireless Tower Transactions (pub. 19 Nov 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873961

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions -- Effective 5/28/14 to 6/6/16 (pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748781

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating Criteria for U.S. Commercial Mortgage Servicers (pub. 14 Feb 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735382

Related Research

Landmark Infrastructure - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=881773

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1006176

ABS Due Diligence Form 15E 1

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=1006176&flm_nm=15e_1006176_1.pdf

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1006176

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160616006305/en/

Fitch Ratings
Primary Analyst
Adam J Ott
Director
+1-312-368-2094
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
David Ro
Director
+1-312-368-3132
or
Committee Chairperson
Tara Sweeney
Senior Director
+1-212-908-0347
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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