--Joy Wiltermuth
Global Tower Partners is issuing $250 million in five-year commercial mortgage backed securities. The deal is 80% backed by mortgages on 1,351 wireless communication towers, as well as equity pledges by the issuer, according to a presale report from Fitch Ratings.
The transaction, Global Tower Series 2010-1, has two tranches: $200 million of A-rated bonds and $50 million of BB- rated bonds, which are slated to price mid-week. The deal marks the first new cell tower issuance in the past few years. Traders are indicating that it is still too early to determine price talk, with pre-sale reports only hitting their desk this morning.
Securitization of cash flows on tower leases account for only a fraction of the CMBS transaction volume. Indeed, there have been ten securitizations in the sector rated by Fitch since 2004, with the last transaction, Crown Castle Senior Secured Tower Revenue Notes, Series 2010-1, 2010-2 and 2010-3, being a $1.9 billion deal. It was four times oversubscribed, with spreads tightening after the initial pricing, according to market sources.
One bright spot in the sector has been increased cash flows and strong demand for more data. Cash flows are up 25% from the ’04 and ’05 deals, according to Jeff Watzke, a senior director at Fitch. An uptick in smartphone purchases and data usage has caused a spike in demand for tower sites among wireless carriers. For example, AT&T Wireless is reporting a doubling of its subscribers to 42% using integrated data services at the end of the third quarter. Fitch is anticipating the wireless industry will have generated in excess of $44 billion in data revenue by the end of 2009, with the figure jumping to $51 billion by year’s end.
Barclays Capital and Deutsche Bank are joint book runners. Officials at the banks declined to comment on the transaction.