Current Economic Conditions Are Having Little Effect On Cell Phone Tower REIT Investment Returns

Those poles and towers with cell phone antennas dangling from them in practically every community are more than an eyesore — they could be your next lucrative investment. 

But it’s not the cell phone companies that own them, according to Hoya Capital, a real estate investment advisory firm registered with the Securities and Exchange Commission (SEC). Nearly 75% of the wireless communication infrastructure in the U.S. in the third quarter of 2022 is owned by real estate investment trusts (REITs), according to Hoya’s latest report.

The towers are owned by REITs, including American Tower Corp. AMT, 35%; Crown Castle Inc. CCI, 30%; and SBA Communications Corp. SBAC, 10%; while private investors and others owned just 22% of the tower assets.
While the cell tower REITs primarily own macro communications towers hosting cellular network broadcast equipment from AT&T Inc. T, Verizon Communications Inc. VZ, T-Mobile US Inc. TMUS and Dish Network Corp. DISH, Crown Castle and Uniti Group Inc. UNIT also have significant investments in fiber and small-cell networks.

The good news is that cell phone towers have continually shown strong investment demand from REITs, resulting in solid returns for investors. According to the National Association of Real Estate Investment Trusts (NAREIT), a global voice for REITs and real estate companies, infrastructure REITs spent more than $557 million to buy cell tower assets in the first half of 2022. 

Although that number represents a fraction of the more than $10.2 billion purchased in the first half of 2021, it is still twice the volume of deals in the same period of 2019 and 2020. Although fewer real estate investors play in this space, sellers of cell phone towers and antenna arrays have no shortage of buyers for those assets.

That long list of potential buyers ranges from infrastructure REITs and private equity funds to the telecommunications companies themselves. 

Jason Lund, leader of Technology Infrastructure for JLL in Charlotte, North Carolina, told WealthManagement.com that despite the current loan climate, he sees no signs of investment interest subsiding. 

“Fluctuations in U.S. and global lending rates won't necessarily affect a wide swath of telecommunications and infrastructure investors,” Lund said. “Demand for cell phone towers and antenna arrays is as strong as it was a year ago from the buyer’s side — with so few assets available, perceived pricing is still relatively stable.”

Two cell tower equity REITs are generating income through leasing their owned infrastructure — a cell tower and fiber optics. Benzinga has identified Crown Castle and American Tower Corp. as the equity REITs worth looking into for investment in cell towers and fiber optics. 

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Unsplash Photo by iStrfy, Marcus