The marketplace for tower assets continues to be very competitive on a global as well as domestic basis, in part, because of the increased involvement of long-term investors, SBA Communications President and CEO Jeffrey Stoops said the recent earnings report. Investors, such as infrastructure funds pension funds, insurance companies and sovereign wealth funds, are attracted to industry’s with low competition and high barriers to entry, and they also invest for the long term.
“In the last 12 months, these funds have outbid strategic investors for a number of communications assets around the globe,” Stoops said. “Now why is that important? Because I know that the assets being purchased by these funds at much higher multiples are nearly of the same quality as ours.”
In an interview with AGL eDigest, separately, Tarpon Towers CEO Ron Bizick agreed with Stoops, saying towers are attractive to infrastructure funds, because they are stable, long-term businesses, with steady cash flows.
“It is not surprising that pension funds and infrastructure funds would gravitate toward that stability,” Bizick said. “They accept much different returns on their investments, compared with private equity. They can underwrite returns in the high single digits or low double digits, which is a far cry from the many of the traditional private equity funds in the United States.”
Infrastructure funds have enormous amounts of money, which they invest over a much longer period of time. Their deals can be written for less in annual returns.
MacQuarie Infrastructure and Real Assets, for example, has been investing in cell towers, along with bridges, roads and tunnels, among other things, for more than 20 years.
“We set out to offer investors a new kind of investment. One with long-term horizons offering sustainable, predictable returns and low correlation to traditional asset classes: infrastructure,” the firm’s web site said. “Today we have an unrivalled track record in infrastructure asset management. We take a responsible, long-term approach to building sustainable value throughout the investment cycle by investing wisely, managing with discipline and selling at the right time.”