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Fitch Affirms GTP Cellular Sites, LLC Secured Cellular Sites Revenue Notes, Series 2012-2
[December 09, 2016]

Fitch Affirms GTP Cellular Sites, LLC Secured Cellular Sites Revenue Notes, Series 2012-2


Fitch Ratings has affirmed three classes of GTP Cellular Sites, LLC commercial mortgage pass-through certificates, 2012-2 as follows:

--$106 million 2012-2 class A at 'Asf', Outlook Stable;

--$41 million 2012-2 class B at 'BBB-sf', Outlook Stable;

--$27 million 2012-2 class C at 'BB-sf', Outlook Stable.

Class A of GTP 2012-1 has paid in full.

The affirmations are due to the stable performance of the collateral since issuance. The Stable Outlook reflects the limited prospect for upgrades given the provision to issue additional notes.

As part of its review, Fitch analyzed the financial and site information provided by the master servicer, Midland Loan Services.

The certificates represent beneficial ownership interest in the cellular sites, primary assets of which are 697 wireless communication sites leased to 1,047 cellular tower tenants. As of the November 2016 distribution date, the aggregate principal balance of the notes has been reduced by 38.3% to $174 million from $282 million at issuance.

The series 2012-2 class A notes were interest-only for the first year and have commenced amortization as expected. Series 2012-1 class A paid off in June of 2016 along with a partial release of collateral. Aside from scheduled amortization on series 2012-2 class A, no other principal will be required to be paid prior to the anticipated repayment date of March 2019 for the remaining classes.

KEY RATING DRIVERS

Stable Cash Flow and Leverage: As of November 2016, Fitch stressed debt service coverage ratio (DSCR) of 1.41x which compares with approximately 1.20x at last review. The debt multiple relative to Fitch's net cash flow (NCF) is 7.49x, which equates to a debt yield of 13.4%.

Leases to Strong Tower Tenants: There are 1,047 wireless tenant leases. Telephony tenants represent 98.9% of the leases on the cellular sites, and 31.3% of this run-rate revenue is from investment-grade tenants. T-Mobile (News - Alert) is the largest tenant, representing approximately 30.7% of run-rate revenue.

Additional Notes: The borrower has the ability to issue additional notes in the future that will rank senior to, pari passu with, or subordinate to the rated notes. These may be issued without the benefit of additional collateral, provided the post-issuance DSCR is not less than 1.75x. The possibility of upgrades may be limited due to this provision.

Risk of Technological Obsolescence: The notes have a rated final payment date in 2042, and 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. Currently, WSPs depend on towers to transmit their signals and continue to invest in this technology.

RATING SENSITIVITIES

The Stable Outlook on the series 2012-2 notes reflect the stable performance of the portfolio. Upgrades are limited based on the provision to issue additional notes. Downgrades are unlikely based on continued cash flow growth due to annual rent escalations and automatic renewal clauses resulting in higher debt service coverage ratios since issuance.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC (News - Alert) RULE 17G-10

No third-party due diligence was provided or reviewed in relation to this rating action.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 16 Jun 2016)

https://www.fitchratings.com/site/re/882401

Criteria for Rating U.S. Wireless Tower Transactions (pub. 09 Nov 2016)

https://www.fitchratings.com/site/re/889829

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130



Related Research

GTP Cellular Sites, LLC Secured Cellular Sites Revenue Notes, Series 2012-1 and 2012-2 - Appendix


https://www.fitchratings.com/site/re/671751

GTP Cellular Sites, LLC Secured Cellular Sites Revenue Notes, Series 2012-1 and 2012-2 -- Appendix

https://www.fitchratings.com/site/re/673363

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1016240

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1016240

Endorsement Policy

https://www.fitchratings.com/regulatory

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