American Tower Corp (NYSE:AMT) has announced the issuance of $1.2 billion in senior unsecured notes, according to a recent SEC filing. The two tranches of debt, comprising $600 million of 5.000% senior notes due in 2030 and $600 million of 5.400% senior notes due in 2035, were issued under the terms of an indenture dated June 1, 2022, and a supplemental indenture dated Thursday.
The Boston-based real estate investment trust plans to utilize the net proceeds, approximately $1,183.7 million after underwriting discounts and expenses, to repay existing debt. Specifically, the funds will be directed towards reducing the company's obligations under its $6.0 billion senior unsecured multicurrency revolving credit facility and its $4.0 billion senior unsecured revolving credit facility, both amended and restated in December 2021.
Interest on the newly issued notes will be payable semi-annually, with the 2030 notes carrying a 5.000% interest rate and maturing on January 31, 2030, and the 2035 notes bearing a 5.400% interest rate with a maturity date of January 31, 2035. The company has reserved the right to redeem the notes at any time at the applicable redemption price, which includes a make-whole premium if redeemed before a specified date.
The indenture includes covenants that, among other restrictions, limit the company's ability to merge, consolidate, or sell assets, as well as its and its subsidiaries' abilities to incur liens. However, these covenants are subject to certain exceptions.
Should an event of default occur, including a failure to pay interest or principal or a breach of covenants, the trustee or the holders of at least 25% in principal amount of the outstanding notes may declare the principal amount due and payable immediately.
This financial move comes as American Tower continues to expand its portfolio of communication sites, which is crucial for the infrastructure of wireless communication services.
The information for this report is based on a press release statement.
In other recent news, American Tower Corporation has reported significant growth in its third-quarter performance for 2024, primarily driven by increased demand for its global real estate assets, notably in the tower and data center segments. The company also announced the departure of Sanjay Goel, Executive Vice President and President, Asia-Pacific, effective March 31, 2025, following the recent sale of its India operations. American Tower will not seek a replacement for Goel's position, marking a shift in its global strategy.
The company has maintained its adjusted earnings outlook midpoint at $9.95 per share, despite foreign exchange impacts, and plans to resume dividend growth in 2025, subject to Board approval. In addition, American Tower has reported over 7% organic tenant billings growth in Europe, adding 1,200 new sites since early 2021. The successful sale of its India business is now reported as discontinued operations in its financial reporting.
Furthermore, American Tower has shown interest in potential acquisitions of European tower assets, demonstrating a disciplined approach to investment. These recent developments highlight the company's strategic focus on enhancing its portfolio in developed markets and capitalizing on the strong demand for data services. However, challenges such as foreign exchange risks and interest rate fluctuations have been identified.
InvestingPro Insights
American Tower Corp's recent $1.2 billion debt issuance aligns with its strategy to manage its capital structure effectively. According to InvestingPro data, the company has a market capitalization of $94.92 billion and a revenue of $11.17 billion for the last twelve months as of Q3 2024. This substantial revenue base supports American Tower's ability to take on additional debt for refinancing purposes.
InvestingPro Tips highlight that American Tower has raised its dividend for 13 consecutive years and has maintained dividend payments for 14 consecutive years. This consistent dividend policy, coupled with a current dividend yield of 3.23%, may appeal to income-focused investors despite the new debt issuance.
The company's profitability is underscored by an InvestingPro Tip indicating that analysts predict the company will be profitable this year. This is further supported by the robust gross profit margin of 70.86% for the last twelve months as of Q3 2024, demonstrating American Tower's operational efficiency.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for American Tower Corp, providing a deeper understanding of the company's financial health and market position.
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