Crown Castle (CCI) Expands Credit Facility, Ups Flexibility
As part of its effort to boost balance-sheet flexibility, Crown Castle International Corp. CCI recently raised the commitments under its senior unsecured revolving credit facility by $2.0 billion. It has also increased the maturity of the entire credit facility to July 2027.
Now, Crown Castle’s credit facility comprises a $7.0 billion senior unsecured revolving credit facility and a $1.2 billion senior unsecured term loan A facility.
Efforts to boost financial flexibility will act as a tailwind for Crown Castle. CCI’s unmatched portfolio of towers has a significant presence in the top 100 BTAs of the United States. Moreover, investment in fiber and small cell business on the back of acquisitions, constructions and new deployments complements its tower business and offers meaningful upside potential to its 5G growth strategy.
Crown Castle focuses on maintaining sufficient liquidity and a decent balance sheet position. As of Mar 31, 2022, CCI had cash and cash equivalents of $312 million, up from $292 million as of Dec 31, 2021. It also enjoys investment-grade credit ratings of BBB-, BBB+ and Baa3 from Standard & Poor’s, Fitch, and Moody’s, respectively, facilitating access to debt markets on attractive terms.
By increasing the revolving credit facility commitments and maturity extension of existing facilities, the latest efforts will further add to its flexibility and enhance its growth.
Nonetheless, Crown Castle has a substantially leveraged balance sheet. Additional borrowings to fund near-term capital expenditure will not only inflate its debt burden but also become costlier as interest rates increase. Also, the dividend payout might become less attractive than the yields on fixed income and money market accounts.
Shares of this Zacks Rank #3 (Hold) company have declined 11.6% over the past three months compared with the industry’s fall of 15.2%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are Extra Space Storage EXR, Host Hotels & Resorts HST and Pebblebrook Hotel Trust PEB, each carrying a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Extra Space Storage’s ongoing year’s FFO per share has been raised 3.4% over the past two months to $8.26.
The Zacks Consensus Estimate for Host Hotels’ 2022 FFO per share has moved 1.2% upward in the past month to $1.65.
The Zacks Consensus Estimate for Pebblebrook Hotel’s current-year FFO per share has moved 2.9% northward in the past month to $1.80.
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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