Vertical Bridge REIT has completed a merger with Eco-Site, developer of tower sites and infrastructure with nearly 600 towers.
“These are young, newly built broadband towers,” said Alex Gellman, Vertical Bridge CEO. “Great structures, very well built, great ground leases. Great tenants with no restrictions, but the tenancy is low and there is room to lease them up.
“The first thing we look at in a potential transaction is can we lease them up in three, five or seven years,” he added. “Separately, we looked at how we would fit their people in, and we a lot of open positions, which they will fill. We will invest in the SG&A to bring on more of them.”
The combination of the two companies increases Vertical Bridge’s owned and master-leased tower portfolio to more than 20,000 sites and its entire portfolio to more than 290,000 sites located in all 50 states and Puerto Rico. Most M&A activity in the tower space traditionally consists of asset purchases, but Eco-Site was not interested in selling its assets and starting over again.”
Eco-Site co-founders Dale Carey, Bob Glosson and Rich Stern are joining the Vertical Bridge executive team. Carey will serve as executive vice president of strategy and convergence at Vertical Bridge. Glosson becomes senior vice president of real estate solutions, and Stern will be senior vice president of real estate.
“The second half of this story is we have the opportunity to add a great team that we know very well,” Gellman said. “The assets alone were not as interesting to us as the assets plus the people.
“Our view of the next five years is very bullish. Maybe not next year, but there is going to be a lot of activity in the marketplace over the next five years and we thought it was great opportunity to add potentially 50 industry professionals that are very good at what they do.”
Gellman said he believed the Eco-Site investors were attracted by the scale of the combined companies, which provides them with a much bigger platform.
Carey agreed, “The wireless sector is significantly different than it was just a few years ago and scale matters more than ever when it comes to being able to meet the evolving needs of our customers.”
Before the acquisition, Vertical Bridge CFO Mike Romaniw was seeking a BTS financing facility with a longer tenure that would better match up with the towers it was building, one that could be leased up and flipped into a securitization down the road. The bridge to securitization is designed specifically for newly built BTS towers and ongoing construction of BTS towers.
“When the Eco-Site opportunity arose, Mike simply used that instrument finance the deal,” Gellman said. “We did that and there is still room to finance more towers as we build them. We have an additional pipeline that came with Eco-Site, in addition to ours.”
“Gellman added, “As a private, at-scale and permanent company, we have the flexibility and capital to be strategic in our growth model and we will continue to identify opportunities to expand our footprint that fit into our pure tower, pure U.S. strategy.”
Financial terms of the private transaction were not disclosed.