Crown Castle International Corp. (CCI - Free Report) has decided to convert its tower business into a Real Estate Investment Trust (REIT). Crown Castle – a leading independent operator of wireless communication towers in the U.S. – will function as an REIT starting Jan 1, 2014. Earlier in 2012, the company’s closest rival American Tower Corp. (AMT - Free Report) also converted itself as a REIT.
An REIT status will benefit the company in terms of tax savings and enhancing long-term shareholders wealth. Moreover, it will also minimize the weighted average cost of capital (WACC). Following the conversion, Crown Castle will distribute 90% of its earnings through dividends every year, reducing tax.
Unlike American Tower, Crown Castle will not make any special dividend payments till it starts operating as an REIT. In order to qualify as an REIT, Crown Castle will follow some major guidelines related to ownership and transfer restrictions. The conversion of its tower business into an REIT is subject to approval of its board of directors and shareholders.
Crown Castle declared improved second-quarter 2013 financial results outpacing both the top and bottom lines of the Zacks Consensus Estimate. For fiscal 2013, the company expects Site Rental revenues to be in the range of $2,471 million to $2,481 million while net income is expected to be between $116 million and $212 million or 40 cents to 73 cents per share.
Crown Castle currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks in the wireless tower industry include SBA Communications Corp. (SBAC - Free Report) and Douglas Emmett Inc. (DEI - Free Report) . Douglas Emmett carries a Zacks Rank #2 (Buy) while SBA Communications carries a Zacks Rank #3 (Hold).