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American Tower (AMT) to Sell 10% in ATC Europe to Allianz Capital

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American Tower Corporation (AMT - Free Report) will sell a 10% stake in ATC Europe to Allianz Capital Partners, in a transaction valued at more than €530 million, giving ATC Europe an enterprise value of more than €8.8B. The move will provide capital for strengthening the company’s European business.

Allianz Capital Partners will acquire the stake on behalf of Allianz insurance companies (Allianz) and the Allianz European Infrastructure Fund. With this, it will be joining Canadian investment firm, CDPQ, in a long-term strategic partnership with the tower REIT. The transaction, expected to close in third-quarter 2021, is subject to customary closing norms and regulatory nods.

American Tower will keep the managerial and operational control, and the daily oversight of ATC Europe, while Allianz will secure seats on ATC Europe’s Boards alongside certain governance rights.

The move positions both companies to benefit from the robust long-term secular growth trends in the wireless industry in the European markets, backed by 5G deployments and increasing demand for communications and digital infrastructure. This May, American Tower sold a 30% stake in ATC Europe to CDPQ, in a transaction valued at €1.6 billion.

Tom Bartlett, American Tower’s president and CEO, stated, “We look forward to growing the business together while strengthening mobile broadband access in our served markets. With Allianz and CDPQ as committed, long-term partners in our newly expanded European business, we are more confident than ever that we are optimally positioned to generate sustainable growth and attractive returns for many years to come.”

Recently, American Tower closed the first tranche of its proposed Telxius Towers buyout for €6.2 billion, which included roughly 20,000 communications sites in Germany and Spain. The company anticipates closing the additional 4,000 rooftop communications sites in Germany in third-quarter 2021.

The company’s extensive and geographically-diversified communication real estate portfolio is well poised to benefit from increasing capital spending by wireless carriers in 5G deployments and future deployment of additional spectrum. Decent liquidity and prudent capital allocations will help it meet near-term obligations.

American Tower currently carries a Zacks Rank #3 (Hold). In the past three months, the company’s shares have gained 19.8% compared with its industry's rally of 13.1%. In addition, the Zacks Consensus Estimate for 2021 funds from operations (FFO) per share moved up marginally to $9.43 over the past month.

Zacks Investment ResearchImage Source: Zacks Investment Research

Key Industry Picks

A few better-ranked REIT stocks are mentioned below:

OUTFRONT Media Inc.’s (OUT - Free Report) Zacks Consensus Estimate for 2021 funds from operations (FFO) per share moved up 3.6% over the past two months. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Geo Group Inc’s (GEO - Free Report) Zacks Consensus Estimate for the current-year FFO per share moved 10.1% north in two months’ time. The company carries a Zacks Rank of 2 at present.

BRAEMAR HOTELS & RESORTS INC.’s (BHR - Free Report) FFO per share estimate for the ongoing year has been revised upward by 4.5% in the past month. The company carries a Zacks Rank of 2, currently.

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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