American Tower Corporation AMT priced a public offering of two different issues of unsecured senior notes. Specifically, the 2028 notes, with an aggregate principal amount of 750 million euros ($893.4 million), carry an interest rate of 0.5% per annum and have been priced at 99.555% of the face value.
Another offering of 2032 senior notes, with an aggregate principal amount of 650 million euros ($744.3 million), has been priced at 99.575%. These securities carry an interest rate of 1% per annum.
Net proceeds from the offering are estimated to be 1,385.2 million euros ($1,650 million) after deducting estimated offering expenses and underwriting discounts.
American Tower intends to allocate net proceeds from the offering to reduce the outstanding balance under its $3.1-billion senior unsecured multicurrency revolving credit facility, which was amended and restated in December 2019. Additionally, the company will use proceeds to repay balance under its $1.19-billion senior unsecured term loan that it entered in April 2020 and for general corporate needs.
The company’s efforts to tap the debt market amid a low interest-rate environment and in such testing times are a strategic fit. Furthermore, since unsecured notes can be borrowed at lower rates, the new debt will result in lower funding costs.
Markedly, as of the second-quarter end, American Tower enjoyed investment-grade credit rating of BBB-, BBB+ and Baa3 as well as a stable outlook from Standard & Poor’s, Fitch and Moody’s, respectively. This enables the company to access the debt market at favorable terms.
Further, at the end of the second quarter, the company had $6.5 billion of total liquidity. This comprised $2 billion in cash and cash equivalents, and availability of $4.5 billion under its numerous revolving credit facilities (net of any outstanding letters of credit). This supports its debt servicing ability.
However, customer concentration is high for American Tower, with AT&T (NYSE:T), Verizon (NYSE:VZ) Wireless and T-Mobile being its top three customers, accounting for 51% of its total property segment revenues as of second-quarter 2020. The loss of any of these customers, consolidation among them or reduction in network spending leads to a material impact on the company’s top line.
Shares of this Zacks Rank #3 (Hold) company have gained 7.9% over the past year against the industry’s 9.1% decline.
Stocks to Consider
Duke Realty (NYSE:DRE) Corporation’s DRE Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been revised 3.5% upward to $1.49 over the past month. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sabra Healthcare REIT (NASDAQ:SBRA), Inc.’s SBRA FFO per share estimates for the ongoing year have been revised 4.3% upward to $1.71 over the past month. The company currently carries a Zacks Rank of 2.
Physicians Realty (NYSE:DOC) Trust’s DOC FFO per share estimates for 2020 have been marginally revised upward to $1.06 over the past week. It currently carries a Zacks Rank of 2.
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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