The first quarter for SBA Communications was about a simple, straightforward and solid as the REIT could have hoped for. That is according to CEO Jeff Stoops.
On the firm’s Q1 earnings call, he said that the company exceeded expectations across all financial metrics. “We continued to see healthy, operational leasing activity, and our services business again had another very strong quarter. While it has only been two months since our last earnings call, we feel like a lot has happened, particularly around improved clarity for the remainder of 2019.”
As a result, he said on the call, the REIT was “able to increase our full year outlook. Domestically, the strong operational leasing activity we saw in the second half of 2018 continued into the first quarter of 2019. All four major U.S. wireless carriers were active during the quarter to varying degrees with particular increases in new technology and capacity-related upgrades, pushing our amendment business to the highest quarterly contribution in over a year.”
He added that “We also saw continued contributions from DISH who remains busy with their Phase 1 network build-out. Our leasing application backlogs remain very strong, giving us confidence in continued steady lease-up results in Q2 and beyond. Internationally, we also had another solid leasing quarter with steady contributions across all of our markets, led once again by Brazil.”
The contractual revenue signed up during this quarter in the company’s international markets came about 48% from new leases and 52% from amendments, though it continues to be very balanced between coverage builds and technology upgrades. “Similar to last quarter, we had solid contributions from all four major wireless carriers in Brazil. Although, the currency has continued to weaken a little bit, operationally, we remain on target for strong growth in Brazil once again this year or, as Brendan mentioned earlier, but for the weakening of the currency, our 2018 outlook would have been increased even more.”
According to Stoops, the company is optimistic about the opportunities that exist throughout all of its international markets. “During the first quarter, we spent limited amounts of discretionary capital on new asset additions and no capital on share repurchases in the two months since our last earnings call. As a result, we saw our leverage quickly dropped to the low end of our target leverage range at 7.0x. This drop in leverage in one quarter demonstrates how quickly we can organically delever and the flexibility that exists within our capital structure.”
He adds that they do expect investment to increase through the remainder of 2019. “We are still committed to growing our portfolio 5% to 10% this year through disciplined acquisitions and new builds. We, of course, focus on growing our portfolio throughout our existing markets, but we also regularly explore opportunities in other markets. Our focus has always been and continues to be on finding accretive tower opportunities to create shareholder value and frankly, avoiding those that do not.”