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American Tower (AMT) to Raise $1.38B With Senior Notes Offering

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·3 min read
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American Tower Corporation AMT has priced a public offering of two series of senior unsecured notes, aggregating $2.6 billion in principal amount. The net proceeds of the offering are anticipated to be $1,386.3 million, after deducting underwriting discounts and projected offering expenses.

This consists of 1.600% notes due 2026 and 2.700% senior notes due 2031, both with a principal amount of $700 million, respectively. The 2026 notes have been priced at 99.918% of face value, while the 2031 notes will be issued at 99.807% of face value.

American Tower plans to use the net proceeds to pay down the outstanding balance under the company’s $4.1 billion senior unsecured multicurrency revolving credit facility. Notably, the facility was amended and restated in February 2021.

American Tower’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are strategic fits. Also, tapping the debt market for meeting outstanding balance under its credit facility will help the company to preserve its liquidity.

In fact, it has a robust operating platform, with consistent adjusted EBITDA margins and revenue growth as well as a favorable return on invested capital. This indicates the strength in the company’s core underlying business and supports its ability to manage its near-term obligations.

Also, as of the fourth-quarter 2020 end, its net leverage ratio was at 5X and total liquidity was at $4.9 billion. This comprised $1.7 billion in cash and cash equivalents, and availability of $3.2 billion under its revolving credit facilities (net of any outstanding letters of credit). Moreover, with weighted average remaining term for the debt of seven years, it has decent financial flexibility.

Finally, as of the fourth-quarter end, it enjoyed investment-grade credit ratings of BBB-, BBB+ and Baa3 as well as a stable outlook from Standard & Poor’s, Fitch, and Moody’s, respectively. This renders the company favorable access to debt.

However, the note offering increases the company’s long-term debt.

Shares of this Zacks Rank #3 (Hold) company have gained 2.2% over the past year compared with the industry’s growth of 26.4%.

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Extra Space Storage Inc.’s EXR Zacks Consensus Estimate for 2021 FFO per share has moved up 8.1% to $5.97 in the past month. The company currently carries a Zacks Rank of 2 (Buy).

Global Net Lease, Inc. GNL has a Zacks Rank of 2 at present. The Zacks Consensus Estimate for 2021 FFO per share has been revised 4% upward to $2.10 in a month’s time.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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