Let’s Talk Towers

American Tower hosted their quarterly conference call Wednesday morning, and there was a lot to learn. Of course, the recently acquired Verizon portfolio was discussed. Thomas A. Bartlett, Chief Financial Officer & Executive Vice President, noted that the Verizon sites are delivering solid results and performing in line with the company’s expectations. “We constructed 12 towers in the quarter and purchased or extended the remaining term on nearly 500 ground leases, with extensions averaging about 29 years. Including the new Verizon sites, around 62% of the land under our U.S. towers is now either owned or controlled for more than 20 years,” Bartlett explained. The company hopes to own 80% of the land under their U.S. towers in the next five years. American Tower has also been expanding their small cell and DAS business, owning nearly 300 domestic indoor DAS systems online. On a year-over-year basis, this portfolio has grown nearly 11% adding 32 new systems since the second quarter of last year. “We are pleased with the performance of these systems and have been able to attain average indoor DAS tenancies of about 2.2 with an NOI yield of nearly 16%. DAS, in combination with our Managed Rooftop business, represents about 6% of our U.S. revenues and had revenue growth of over 25% in the quarter,” Bartlett explained. James D. Taiclet, Jr., Chairman, President & Chief Executive Officer, also commented that the integration of the Verizon portfolio has been solidly on track and that the new business pipeline on the towers is shaping up nicely. “Consequently, our experience to-date with the Verizon towers is confirming our valuation assumptions on the attractiveness of those site’s locations, pent-up demand for both co-location and amendment activity and the quality of those assets. We expect that the addition of the Verizon portfolio will further strengthen our domestic growth profile and operational performance for many years to come,” Taiclet said.