May 17, 2016 — TowerCo III has sold 253 towers and 95 other assets to Grain Infrastructure II for $244 million. The towers, half of which were new builds and half aggregated, were spread across nearly all of the company’s 37 states and territories.
The company still has some of the assets that it purchased from Iowa Wireless Services, plus the five-year exclusive build-to-suit agreement. By the time of the sale to Grain, TowerCo had already launched TowerCo IV, which has nearly 200 assets.
“We are by no means out of business,” said Richard Byrne, CEO of TowerCo. “We look forward to the continued growth of TowerCo IV, which is off to a very good start.”
It was the company’s first tower sale since TowerCo II Holdings, which had 3,256 towers, were sold to SBA Communications in 2012 in a transaction valued at just under $1.5 billion.
“When we sold TowerCo II, we knew we weren’t going to be able to get back to that size so we had to downsize,” Byrne said. “TowerCo III eventually got back to the size where we ended TowerCo I with 28 people. Our hope is to keep everyone so we are working hard to quickly grow back into our shoes.”
“I’m happy with our growth in TowerCo IV and that we have assets that we were able to move into TowerCo IV. It takes a lot of the pressure off of starting the business over again,” he added.
Third Portfolio Sale Since 2004
The sale marks the third portfolio of towers and assets sold by TowerCo since it was formed in 2004. Equity investors Tailwind Capital Soros Fund Management have been along for the ride since the beginning and have agreed to back the company for a fourth time.
The decision to put the assets up for sale this Spring was made last Summer, but the timing of the transaction was not the result of any time horizon on the part of TowerCo’s equity investors, according to Byrne.
“We have sold assets every four years. That wasn’t a pre-ordained plan. It is just the way it has worked out,” he said. “[The equity investors] are very supportive. If it makes sense to doing something, they will do it. They have always been there with the capital we need to grow and have never rushed us to make a move we didn’t think made sense.”
Byrne is now in search of opportunities to support current staffing levels. He expects a lot of TowerCo’s growth will come from new builds, but said it won’t shy away from further aggregation.
While it is currently a sellers’ market, Byrne said the economics of cell tower development have changed as the wireless industry has matured. He thought TowerCo III’s time horizon would be much longer, but now he says with a laugh that he expects TowerCo IV to take him into his retirement years.
“I tell my investors, the time horizon is going to be longer and the returns are going to be lower. And they get it,” he said.