DBRS Morningstar Confirms Ratings on Vertical Bridge Secured Tower Revenue Notes, Series 2018-2 and Series 2020-2

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on all notes issued by Vertical Bridge Secured Tower Revenue Notes Series 2018-2 and Vertical Bridge Secured Tower Revenue Notes Series 2020-2.

The rating confirmations are based on the following analytical considerations:

--The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary titled “Baseline Macroeconomic Scenarios For Rated Sovereigns,” published on September 8, 2021. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020. The baseline macroeconomic scenarios reflect the view that, although the pandemic remains a risk to the outlook, uncertainty around the macroeconomic effects of the pandemic has gradually receded. Current median forecasts considered in the baseline macroeconomic scenarios incorporate some risks associated with further outbreaks, but remain fairly positive on recovery prospects given expectations of continued fiscal and monetary policy support. The policy response to the coronavirus may nonetheless bring other risks to the forefront in coming months and years.

-- Vertical Bridge’s market position as the largest private company managing cell towers, combined with its history of portfolio growth and successful tower acquisitions, supports its long-term financial prospects.

-- The structural features of the transaction, such as the cash trap mechanism and amortization period triggers, which will help to accelerate the paydown of the note balances if the business environment deteriorates.

-- Evidence of stable cash flows with modest growth since deal inception, with consistent annualized run rate revenue and annualized run rate net cash flow generation over time. The debt service coverage ratio has also remained stable over time with ample cushion against cash trapping and amortization period triggers.

-- The transaction parties’ capabilities with regard to origination, underwriting, and servicing.

-- The mission-critical nature of the assets, which are perceived as vital to the continuity of each tenant’s operations as well as to the overall daily functioning of the general economy through media, telecommunications, technology, and data transmission.

-- The tower sites serve as vital infrastructure whose purpose and use have only increased in importance amid the global pandemic with remote working and learning as more people spend the majority of their days at home, which drives greater mobile device usage and demand for voice and data transmission services.

-- New technology development that is unaffected by the coronavirus pandemic, such as the ongoing rollout of 5G, drives higher demand for these towers and leasing of space on these towers.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
The principal methodology is the U.S. ABS General Ratings Methodology (December 12, 2018), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

The rated entity or its related entities did not participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 (212) 806 3253