Nareit’s REITweek: Virtual Investor Conference, billed as the largest annual REIT industry investor conference, concluded yesterday following three days of presentations by various infrastructure companies and all three publicly traded towercos. Industry analyst Jennifer Fritzsche of Wells Fargo Securities offered her insights, confirming the tower sector is still on the right track.
“Given the queue of spectrum that needs to be deployed to meet FCC mandates (i.e.: DISH’s, AT&T’s FirstNet, New T-Mobile, etc.), coupled with new spectrum coming to market (i.e.: CBRS, C-Band, mmWave, etc.), we believe the fundamental growth drivers for towers remain intact over the medium to long term,” she said.
Fritszsche said while the towercos were light on TMUS ramp and DISH details, their optimism for an activity ramp in 2H20 was high, and all appeared confident that DISH was going to show up in a meaningful way.
“One contact noted DISH has already signed “hundreds of leases,” she said.
Towercos looking for the next incremental growth catalysts, according to Fritzsche, have focused on small cells (both indoor and outdoor) and edge opportunities.
“CCI has arguably made the biggest commitment here,” she said. “All three public towercos have been testing opportunities to participate in the migration toward mobile edge compute (MEC), especially ahead of 5G services which will require a low-latency shift in traditional network architecture. While still early innings, we believe the towercos will play a meaningful role in next generation network architecture.”
Evidence of the capital markets remaining open to the tower markets was seen in a recent offering from the largest private tower company, Vertical Bridge. The company announced it had completed a successful $540MM+ ABS deal, according to Fritzsche.
“This is the first non-traditional asset since the ABS market shut down post COVID. Pricing was reportedly comparable to 2018 and 2016 issuances. It is our understanding this deal was multiple times oversubscribed,” she said. “In our view, the success and interest of this deal offers evidence as to the strength and value of towers as an asset class – even in the face of economic dislocation.”