American Tower Corporation agreed to acquire 100% of the outstanding common membership interests of MIP Tower Holdings LLC, a private real estate investment trust, which is the parent company of Global Tower Partners, for approximately $4.8 billion.
GTP owns and operates approximately 5,400 towers across the U.S., 800 domestic property interests under third-party communications sites, and has management rights to over 9,000 domestic sites, which are primarily rooftop assets. In addition, GTP owns 500 communications sites in Costa Rica.
The deal increases American Tower's U.S. portfolio by 25%, strengthening its presence in top 10 markets, including New York, San Francisco and Washington D.C.
GTP's Revenue Sources:
AT&T - 25%
Sprint - 17%
T-Mobile - 16%
Verizon - 12%
Other - 30%
“GTP has constructed and acquired an outstanding U.S. portfolio of tower, rooftop and land assets, which is highly complementary to that of American Tower. Moreover, GTP’s management of these assets has been excellent, as confirmed through our rigorous due diligence process. GTP’s towers boast a high quality customer base, a strong position with respect to ground ownership and lease terms, and additional structural capacity available to facilitate future leasing activity.
With all four major domestic wireless carriers engaged in aggressive multi-year 4G LTE deployments, we believe our acquisition of GTP solidifies our path to achieving our strategic goals related to growing our AFFO over the next five years,” said Jim Taiclet, Chairman, President and Chief Executive Officer of American Tower.
American Tower will pay using approximately $3.3 billion in cash and the assumption of approximately $1.5 billion of existing indebtedness.
American Tower expects to use cash on hand and borrowing capacity under its existing revolving credit facilities, as supplemented by additional anticipated sources of debt financing, to satisfy the cash consideration for this acquisition and other previously announced acquisitions. American Tower intends to maintain its financial and capital structure policies, consistent with investment grade credit metrics, and expects to use the quality cash flow and margin characteristics of the GTP portfolio to de-lever over time back to its stated target leverage range.
American Tower expects that in aggregate, in 2014, the portfolio will generate approximately $345 million in revenues and approximately $270 million of gross margin, and is anticipated to be immediately accretive to Adjusted Funds From Operations (“AFFO”) upon closing.
American Tower said the majority of the portfolio consists of towers located in and around major population areas and along major highways. On average, the towers have a tenancy ratio of just over one tenant per tower, with Nextel Brazil or Nextel Mexico as the primary tenant, providing significant opportunities for future site leasing growth.
Both Nextel Brazil and Nextel Mexico have agreed to leaseback the towers from American Tower for a minimum 12-year initial lease term with additional renewal options thereafter. NII International Telecom S.C.A, a subsidiary of NII based in Luxembourg, has agreed to provide certain credit support with respect to the obligations of Nextel Brazil.