KBRA assigns preliminary ratings to three classes of notes from Hotwire Funding LLC, Series 2023-1, a communications infrastructure securitization (CIS) that is primarily collateralized by fiber-to-the-home networks and related contracts.

Hotwire 2023-1 represents Hotwire Communications, Ltd.’s (Hotwire, the Company or the Parent) second securitization from its master trust, of which approximately $1.58 billion is currently outstanding. The outstanding prior Series 2021-1 Notes, which are highlighted in the table below, and Series 2023-1 Notes share in the same collateral pool. KBRA re-analyzed the prior Series 2021-1 Notes in conjunction with the issuance of the Series 2023-1 Notes, and anticipates affirming all of the outstanding ratings with respect to the Series 2021-1 Notes as of the Series 2023-1 closing date.

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 certain indebtedness including outstanding amounts related to the Series 2021-1 Class A-1 Notes, fund various transaction accounts including the Series 2023-1 Prefunding Account, pay certain expenses and for general corporate purposes, which may include a distribution to the Parent for growth capital expenditures.

The business of Hotwire Funding LLC (the Issuer) is to own, manage and operate fiber optic communication systems for the delivery of digital infrastructure services (Services) used by multi-dwelling units (MDUs) and/or multi-tenant properties including homeowners’ associations (HOAs), condominium associations (COAs), apartments, student housing, hotels and municipalities (each a Bulk Community) as well as individual residents within a Bulk Community. The assets will consist primarily of fiber-to-the-home (FTTH) infrastructure, related easements, rights of use and other access agreements (collectively, Fiber Network Assets), related customer contracts and a shared infrastructure servicer agreement for use of certain shared assets necessary to operate such Fiber Network Assets. Each collection of Fiber Network Assets within a specific Bulk Community is referred to as a “Fiber Network”, and each customer contract with a Bulk Community is referred to herein as a “Bulk Contract”. As of May 10, 2023 (the Series 2023-1 Cut-off Date or Cut-off Date), the Issuer provides internet and cable services through 675 networks, which have an aggregate Annualized Run Rate Revenue (ARRR) of approximately $271.8 million and an Annualized Run Rate Net Operating Income (ARRNOI) of approximately $177.4 million.

To access ratings and relevant documents, click here.

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Related Publications

• Hotwire Funding LLC, Series 2021-1 Surveillance Report
• Hotwire Funding LLC, Series 2021-1 New Issue Report
• Communications Infrastructure Securitization (CIS) Global Rating Methodology
• US CMBS Property Evaluation Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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