KBRA Assigns Preliminary Ratings to ExteNet Issuer, LLC, Series 2024-1 Senior Secured Notes
8 Jul 2024 | New York
KBRA is assigning preliminary ratings to the Series 2024-1 Class A-2 Notes, Class B Notes, and Class C Notes (the Series 2024-1 Notes) from ExteNet Issuer, LLC, (the Issuer), a communications infrastructure securitization.
The Series 2024-1 Notes are anticipated to be issued by ExteNet Issuer, LLC (the Issuer) and represents ExteNet Systems, LLC’ (ExteNet, the Company, or the Manager) second securitization. The transaction structure is a master trust, and as such, the indenture permits the issuance of additional classes and series of notes. The proceeds from the sale of the Notes will primarily be used to repay the Series 2019-1 Notes, fund certain expenses and accounts, and for general corporate purposes.
The business of the asset entities listed in the Transaction Parties Section consists of owning, managing and operating multi-carrier and multi-technology DNS, which are licensed for use by mobile network operators and other commercial enterprises in both indoor and outdoor spaces, although the collateral as of the 2024-1 closing date will only include outdoor spaces. The assets also include related antennas, fiber, other equipment, and the related distributed network system agreements (DNS Access Agreements) entered into with the relevant property owner, utility, or municipal authority to use locations where the equipment can be placed (DNS sites). The assets also include customer contracts between the Asset Entities and the customers (DNS Licenses) and rights to connect and utilize the equipment, including master customer contracts that cover multiple DNS sites. Each discrete collection of outdoor DNS Sites and related DNS Equipment within a specific geographic area under one or more DNS Licenses, and each collection of DNS Sites and related DNS Equipment contained on the same property is referred to as DNS Network. Together, the DNS Sites and DNS Networks along with related agreements are the DNS Assets.
As of December 31, 2023 (Statistical Cut-Off Date), the collateral included 137 DNS Networks across 26 states, and had an aggregate Annualized Run Rate Revenue (ARRR) of approximately $63.3 million and an aggregate Annualized Run Rate Net Cash Flow (ARRNCF) of $35.1 million. The primary Licensees at the DNS Sites are providers of wireless telephony/data services, including Verizon Wireless, Inc., AT&T Inc. and T-Mobile USA, Inc (which together comprise 98.9% of ARRR). The weighted average remaining tenant lease term based on ARRR is approximately 4.5 years without renewals and 14.8 years including renewals. These tenant leases include rent escalations with a weighted average escalation of approximately 1.7% per year.
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