American Tower Sells $2.5B Stake in Data Center Portfolio

NY-based investment firm Stonepeak has agreed to buy a $2.5B stake in American Tower’s US data center portfolio, which represents about 29% of the portfolio, valued at about $10.5B.

According to American Tower CEO Tom Bartlett, the deal, in which American Tower will retain managerial and operational control of the properties, is part of equity financing for the REIT’s $10.1B acquisition in November of the CoreSite REIT.

The REIT’s data center portfolio encompasses 27 data centers spread across 10 US markets, including 25 data centers that came from the CoreSite acquisition.

Barlett, in a press release, also said the deal with Stonepeak would help enable American Tower’s plan to position its network of cell tower assets as essential internet connection points as 5G is adopted.

“[This agreement} creates a platform through which growth opportunities can be strategically evaluated and financed, with American Tower and Stonepeak committed to executing on opportunities as the 5G ecosystem continues to develop,” he said.

According to a recent analysis by Motley Fool, American Tower’s cell tower assets are becoming essential infrastructure for an emerging global 5G communications network that will support a rapid expansion of mobile data services.

“It’s not a stretch to suggest that the global economy is dependent on American Tower’s infrastructure to function smoothly. This is because cell towers are used by major telecom companies to broadcast mobile data to its customers,” the analysts said.

American Tower’s acquisition of CoreSite was driven by a rapid integration of cell towers, data centers and fiber networks in the emerging 5G ecosystem, with operators acting across the spectrum of infrastructure assets.

American Tower has focused on developing a data center portfolio with facilities that have strong interconnectivity of the type needed to stream the deluge of mobile data.

“American Tower has established one of the premier network-dense, interconnection-focused data center platforms in the US through CoreSite and previous acquisitions, which we view as a great fit for our core infrastructure strategy,” said Andrew Thomas, Stonepeak Managing Director, in a release.

Average monthly mobile data consumption—which is transmitted across American Tower’s network of cell tower properties—is anticipated to grow at double-digit rates annually over the next five years, which is likely to increase the demand for additional cell towers.

The importance of American Tower’s assets to its tenants—including major telecom companies—allows the REIT to lock in annual lease escalators and starting lease terms of 5 to 10 years on its leases, according to Motley Fool’s analysts.

With 221,000 communications assets and data centers in 25 countries, American Tower tops the leaderboard among REITs that specialize in cell towers with a market cap of more than $100B.