Crown Castle International Corp. CCI priced its previously-announced public offering of three series of senior notes.
The senior notes, due 2025 with an aggregate principal amount of $500 million, have been priced at 99.736% of the face value. It carries a yearly interest rate of 1.350% and will yield 1.404% to investors.
The $1.1-billion senior notes have been issued at 99.830% of face value. The senior notes will mature in 2031 and carry a coupon rate of 2.250% per annum. It will yield 2.268% to investors.
Lastly, the senior notes due 2051 have been priced at 99.786% of the face value to yield 3.261% to investors. The $900-million notes have an interest rate of 3.250% per year.
The net proceeds from the offering are expected to aggregate around $2.473 billion, after deducting the underwriting discount and other estimated offering expenses. The company intends to use these proceeds along with the available cash balance to redeem or repurchase all of its outstanding 2.250% senior notes due 2021, 3.400% senior notes due 2021 and 4.875% senior notes due 2022.
Crown Castle’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are a strategic fit. Notably, the company exited first-quarter 2020 with cash and cash equivalents of $310 million. Further, in April, the company opportunistically accessed the bond market to procure long-term debt of $1.25 billion in aggregate principal amount at attractive rates. The funds were used to repay the outstanding balance on its revolving credit facility, resulting in available liquidity of $5 billion from undrawn capacity available under its revolving credit facility. Hence, the company has sufficient liquidity to meet its near-term capital commitments.
Further, with an increase in data volumes and the deployment of the 5G network, wireless carriers are expanding and enhancing their networks. The positive trends are spurring demand for the company’s communication infrastructure assets and will drive growth in site-rental revenues in the ongoing year, supported by higher tenant additions.
Moreover, shares of this Zacks Rank #3 (Hold) company have gained 25.2% over the past year against the industry’s decline of 1.5%.
Although the notes offering will bolster the company’s liquidity position, it increases long-term debt.In fact, Crown Castle has a substantially leveraged balance sheet and a significant amount of debt relative to its current cash flows. At the end of the first quarter, debt and other long-term obligations aggregated $2.67 billion. Moreover, the company’s debt-to-capital ratio is significantly higher than that of its industry.
Stocks to Consider
Alexander Baldwin Holdings, Inc.’s ALEX Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
One Liberty Properties, Inc.’s OLP FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently flaunts a Zacks Rank of 1.
Gladstone Land Corporation’s LAND FFO per share estimate for 2020 has moved 3% upward to 68 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).
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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