Central States Tower II (CSII) has received $35 million in financing from CIT Corporate Finance , a provider of financing to small and medium sized businesses. The senior secured credit facility will be used to refinance existing debt and provide additional capital for the construction and development of new towers nationwide.
Around five or six lenders are familiar with the tower industry and are willing to provide smaller loans, according to Brian Meier, CST II COO. To qualify for a loan in the range of $35 million to $50 million, it typically takes the cash flow generated by around 150 to 200 towers.
“Traditionally, lenders look at the bottom line and want to see positive EBITDA,” he said. “The challenge for a small tower company is the scale of debt and finding a lender that understands the tower business enough not to require positive EBITDA.”
Meier said the tower company has a strong relationship with CIT. “We appreciate their industry expertise and ability to provide the structural flexibility and capital through this transaction, which will enable us to further grow our company,” he said.
CIT also financed Central States Tower, the predecessor to CSTII, in 2007. Roger Fong, director of CIT Corporate finance, communications, information services & technology, expressed confidence in CSTII.
“The company has continued to successfully leverage its unique tower development expertise, exceptional operational experience and deep, long-standing relationships with wireless operators in building one of the highest quality tower portfolios,” he said.
CSTII is an independent operator and developer of wireless communications towers formed with equity investments from Sweetwater Capital and Viridian Investment Partners. William Marraccini, partner of Sweetwater Capital, called CIT a valued and trusted partner.
CSTII divides in business into build-to-purchase, where it partners with a tower developer, vendor or contractor and portfolio expansion through tower acquisitions, but the largest business model by far is currently build-to-suit, where it develops, builds, owns and operates the tower.
“Since 2011, our business has been almost 100 percent build-to-suit—organic growth. It has been a heavy growth period. We have seen a lot of new tower opportunities across the board. We have seen no slow down,” Meier said.
Goldman Sachs Invested in CSTII in 2012, 2010
CSTII’s most recent cash infusion came in August of last year when it completed a $35 senior credit facility credit agreement with Goldman Sachs Specialty Lending Group on top of the $25 million senior credit facility it received from Goldman Sachs in 2010.