SBA COMMUNICATIONS CORP 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We are a leading independent owner and operator of wireless communications infrastructure, including tower structures, rooftops and other structures that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations are in the United States and its territories. In addition, we own and operate towers in South America, Central America, Canada, and South Africa. Our primary business line is our site leasing business, which contributed 98.8% of our total segment operating profit for the six months ended June 30, 2020. In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of June 30, 2020, we owned 32,610 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers. Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks. Site Leasing Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, South America, Central America, Canada, and South Africa. As of June 30, 2020, (1) no U.S. state or territory accounted for more than 10% of our total tower portfolio by tower count, and (2) no U.S. state or territory accounted for more than 10% of our total revenues for the six months ended June 30, 2020. In addition, as of June 30, 2020, approximately 30.4% of our total towers are located in Brazil and less than 4% of our total towers are located in any of our other international markets (each country is considered a market). We derive site leasing revenues primarily from wireless service provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, and TIM. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an individual site. In the United States and Canada, our tenant leases are generally for an initial term of five years to 10 years with multiple five year renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods. Tenant leases in South Africa and our Central and South American markets typically have an initial term of 10 years with multiple five year renewal periods. In Central America, we have similar rent escalators to that of leases in the United States and Canada while our leases in South America and South Africa escalate in accordance with a standard cost of living index. Site leases in South America typically provide for a fixed rental amount and a pass through charge for the underlying rent related to ground leases and other property interests. Cost of site leasing revenue primarily consists of:  Cash and non-cash rental expense on ground leases and other underlying property interests;  Property taxes;  Site maintenance and monitoring costs (exclusive of employee related costs);  Utilities;  Property insurance; and  Lease initial direct cost amortization. In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years to 10 years with multiple renewal periods, at our option, and provide for rent escalators which typically average 2-3% annually, or in our South American markets and South Africa, adjust in accordance with a standard cost of living index. As of June 30, 2020, approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of property taxes varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing. 22 Table of Contents In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases and other property interests, tenant leases, and tower-related expenses are paid in U.S. dollars. In our Central American markets, our local currency obligations are principally limited to (1) permitting and other local fees, (2) utilities, and (3) taxes. In Brazil, Canada, Chile, and South Africa significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in local currency. In Colombia, Argentina, and Peru, our revenue, expenses, and capital expenditures, including tenant leases, ground leases and other property interests, and other tower-related expenses are denominated in a mix of local currency and U.S. dollars. As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements included in this quarterly report. For the three months ended For the six months ended June 30, June 30, Segment operating profit as a percentage of total 2020 2019 2020 2019 Domestic site leasing 81.9% 80.8% 81.1% 80.7% International site leasing 16.9% 16.5% 17.7% 16.6% Total site leasing 98.8% 97.3% 98.8% 97.3% We believe that the site leasing business continues to be attractive due to its long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease or cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology. We believe that over the long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements. During the remainder of 2020, we expect organic site leasing revenue in both our domestic and international segments to increase over 2019 levels due in part to wireless carriers deploying unused spectrum. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs and minimal non-discretionary capital expenditures. Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal. Consequently, we expect to grow our cash flows by (1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers add or upgrade their equipment. Furthermore, because our towers are strategically positioned, we have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer consolidation or cessations of a specific technology. Site Development Our site development business, which is conducted in the United States only, is complementary to our site leasing business and provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our tower locations. Site development revenues are earned primarily from providing a full range of end to end services to wireless service providers or companies providing development or project management services to wireless service providers. Our services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas on existing infrastructure; (4) support in leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction; (7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services at our towers and at towers owned by others on a local basis, through regional, market, and project offices. The market offices are responsible for all site development operations. For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements in this quarterly report. Customers We lease tower space to and perform site development services for all of the large U.S. wireless service providers. In both our site leasing and site development businesses, we work with large national providers and smaller regional, local, or private operators. Internationally, we lease tower space to all major service providers in South America, Central America, Canada, and South Africa. 23 Table of Contents On April 1, 2020, T-Mobile finalized a merger with Sprint and now operates as T-Mobile. For the three months ended June 30, 2020, T-Mobile represented 40.4% of our total domestic site leasing revenue and 53.0% of our site development revenue. For the six months ended June 30, 2020, T-Mobile represented 40.8% of our total domestic site leasing revenue and 53.8% of our site development revenue. Capital Allocation Strategy Our capital allocation strategy is aimed at increasing shareholder value through investment in quality assets that meet our return criteria, stock repurchases when we believe our stock price is below its intrinsic value and by returning cash generated by our operations in the form of cash dividends. While the addition of a cash dividend to our capital allocation strategy has provided us with a new tool to return value to our shareholders, we will also continue to make investments focused on increasing Adjusted Funds From Operations per share. To achieve this, we expect to continue to deploy capital to portfolio growth and stock repurchases, subject to compliance with REIT distribution requirements, available funds and market conditions, while maintaining our target leverage levels. Key elements of our capital allocation strategy include: Portfolio Growth. We intend to continue to grow our asset portfolio, domestically and internationally, primarily through tower acquisitions and the construction of new towers that meet our internal return on invested capital criteria. Stock Repurchase Program. We currently utilize stock repurchases as part of our capital allocation policy when we believe our share price is below its intrinsic value. We believe that share repurchases, when purchased at the right price, will facilitate our goal of increasing our Adjusted Funds From Operations per share. Dividend. In 2019, we added dividends as an additional component of our strategy of returning value to shareholders. We do not expect our dividend to require any changes in our leverage and, we believe, it will allow us to continue to focus on building and buying quality assets and opportunistically buying back our stock. While the timing and amount of future dividends will be subject to approval by our Board of Directors, we believe that our future cash flow generation will permit us to grow our cash dividend in the future. COVID-19 Update During the six months ended June 30, 2020, we experienced minimal impact to our business or results of operations from the coronavirus (COVID-19) pandemic. The extent to which COVID-19 could adversely affect our future business operations will depend on future developments such as the duration of the outbreak, new information on the severity of COVID-19, and methods taken to contain or treat the outbreak of COVID-19. While the full impact of COVID-19 is not yet known, we will continue to monitor this recent outbreak and the potential effects on our business. Critical Accounting Policies and Estimates We have identified the policies and significant estimation processes listed in the Annual Report on Form 10-K as critical to our business operations and the understanding of our results of operations. The listing is not intended to be a comprehensive list. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Note 2 of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2019. Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates and such differences could be significant. RESULTS OF OPERATIONS This report presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the 24 Table of Contents current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans. Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019 Revenues and Segment Operating Profit: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change Revenues (in thousands) Domestic site leasing $ 388,018 $ 369,180 $ — $ 18,838 5.1% International site leasing 94,385 89,823 (21,411) 25,973 28.9% Site development 24,823 41,144 — (16,321) (39.7%) Total $ 507,226 $ 500,147 $ (21,411) $ 28,490 5.7% Cost of Revenues Domestic site leasing $ 64,093 $ 65,576 $ — $ (1,483) (2.3%) International site leasing 27,505 27,884 (6,880) 6,501 23.3% Site development 19,904 30,988 — (11,084) (35.8%) Total $ 111,502 $ 124,448 $ (6,880) $ (6,066) (4.9%) Operating Profit Domestic site leasing $ 323,925 $ 303,604 $ — $ 20,321 6.7% International site leasing 66,880 61,939 (14,531) 19,472 31.4% Site development 4,919 10,156 — (5,237) (51.6%) Revenues Domestic site leasing revenues increased $18.8 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to (1) revenues from 180 towers acquired and 28 towers built since April 1, 2019 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals. International site leasing revenues increased $4.6 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $26.0 million. These changes were primarily due to (1) revenues from 2,294 towers acquired and 451 towers built since April 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators. Site leasing revenue in Brazil represented 10.8% of total site leasing revenue for the period. No other individual international market represented more than 4% of our total site leasing revenue. Site development revenues decreased $16.3 million for the three months ended June 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint. Operating Profit Domestic site leasing segment operating profit increased $20.3 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since April 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program. International site leasing segment operating profit increased $4.9 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $19.5 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since April 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program. Site development segment operating profit decreased $5.2 million for the three months ended June 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint. ‎ 25 Table of Contents Selling, General, and Administrative Expenses: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 25,233 $ 27,193 $ — $ (1,960) (7.2%) International site leasing 9,035 8,310 (1,451) 2,176 26.2% Total site leasing $ 34,268 $ 35,503 $ (1,451) $ 216 0.6% Site development 4,494 6,885 — (2,391) (34.7%) Other 10,326 13,136 — (2,810) (21.4%) Total $ 49,088 $ 55,524 $ (1,451) $ (4,985) (9.0%) Selling, general, and administrative expenses decreased $6.4 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses decreased $5.0 million. These changes were primarily as a result of decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, back-office operating expenses, and travel related expenses. These decreases were partially offset by increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief. Acquisition and New Business Initiatives Related Adjustments and Expenses: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 3,004 $ 1,272 $ — $ 1,732 136.2% International site leasing 1,630 1,267 (249) 612 48.3% Total $ 4,634 $ 2,539 $ (249) $ 2,344 92.3% Acquisition and new business initiatives related adjustments and expenses increased $2.1 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $2.3 million. These changes were primarily as a result of incremental costs incurred in support of new business initiatives. Asset Impairment and Decommission Costs: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 5,342 $ 8,815 $ — $ (3,473) (39.4%) International site leasing 900 805 (282) 377 46.8% Total $ 6,242 $ 9,620 $ (282) $ (3,096) (32.2%) Asset impairment and decommission costs decreased $3.4 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs decreased $3.1 million. These changes were primarily as a result of a $4.5 million decrease in the impairment charge recorded due to sites decommissioned in the second quarter of 2020 compared to the prior year period, partially offset by a $1.1 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers. ‎ 26 Table of Contents Depreciation, Accretion, and Amortization Expense: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 134,569 $ 131,413 $ — $ 3,156 2.4% International site leasing 42,011 38,194 (9,548) 13,365 35.0% Total site leasing $ 176,580 $ 169,607 $ (9,548) $ 16,521 9.7% Site development 597 678 — (81) (11.9%) Other 1,529 1,279 — 250 19.5% Total $ 178,706 $ 171,564 $ (9,548) $ 16,690 9.7% Depreciation, accretion, and amortization expense increased $7.1 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $16.7 million. These changes were primarily due to an increase in the number of towers we acquired and built since April 1, 2019, partially offset by the impact of assets that became fully depreciated since the prior year period. Operating Income (Expense): For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 155,777 $ 134,911 $ — $ 20,866 15.5% International site leasing 13,304 13,363 (3,001) 2,942 22.0% Total site leasing $ 169,081 $ 148,274 $ (3,001) $ 23,808 16.1% Site development (172) 2,593 — (2,765) (106.6%) Other (11,855) (14,415) — 2,560 (17.8%) Total $ 157,054 $ 136,452 $ (3,001) $ 23,603 17.3% Domestic site leasing operating income increased $20.9 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to higher segment operating profit and decreases in asset impairment and decommission costs and selling, general, and administrative expenses, partially offset by increases in depreciation, accretion, and amortization expense and acquisition and new business initiatives related adjustments and expenses. International site leasing operating income decreased $0.1 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $2.9 million. These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, acquisition and new business initiatives related adjustments and expenses, and asset impairment and decommission costs. Site development operating income decreased $2.8 million for the three months ended June 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from Sprint and T-Mobile, partially offset by a decrease in selling, general, and administrative expenses . Other Income (Expense): For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Interest income $ 699 $ 1,581 $ (155) $ (727) (46.0%) Interest expense (95,687) (97,447) (13) 1,773 (1.8%) Non-cash interest expense (2,337) (651) — (1,686) 259.0% Amortization of deferred financing fees (5,188) (5,116) — (72) 1.4% Other (expense) income, net (31,588) 12,762 (40,376) (3,974) (107.6%) Total $ (134,101) $ (88,871) $ (40,544) $ (4,686) 4.8% 27 Table of Contents Interest expense decreased $1.8 million for the three months ended June 30, 2020, as compared to the prior year primarily due to a lower weighted average interest rate as compared to the prior year, partially offset by a higher average principal amount of cash-interest bearing debt outstanding as compared to the prior year. Non-cash interest expense increased $1.7 million for the three months ended June 30, 2020, as compared to the prior year primarily related to amortization on our interest rate swaps de-designated as cash flow hedges. Other (expense) income, net includes a $31.2 million loss on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the three months ended June 30, 2020. For the three months ended June 30, 2019, other (expense) income, net included a $9.1 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries. Benefit (Provision) for Income Taxes: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Benefit (provision) for income taxes $ 165 $ (15,608) $ 15,113 $ 660 (5.3%) Benefit for income taxes increased $15.8 million for the three months ended June 30, 2020, as compared to the prior year. On a constant currency basis, provision for income taxes decreased $0.7 million primarily due to a decrease in domestic and foreign income taxes partially offset by an increase in foreign withholding taxes. Net Income: For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Net income $ 23,118 $ 31,973 $ (28,432) $ 19,577 74.7% Net income decreased $8.9 million for the three months ended June 30, 2020, as compared to the prior year. This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S. dollar denominated intercompany loans with foreign subsidiaries, partially offset by increases in operating income and benefit for income taxes. Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019 Revenues and Segment Operating Profit: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change Revenues (in thousands) Domestic site leasing $ 774,361 $ 732,017 $ — $ 42,344 5.8% International site leasing 200,397 179,169 (33,469) 54,697 30.5% Site development 49,534 82,254 — (32,720) (39.8%) Total $ 1,024,292 $ 993,440 $ (33,469) $ 64,321 6.5% Cost of Revenues Domestic site leasing $ 127,997 $ 130,690 $ — $ (2,693) (2.1%) International site leasing 59,400 55,485 (10,802) 14,717 26.5% Site development 39,620 62,089 — (22,469) (36.2%) Total $ 227,017 $ 248,264 $ (10,802) $ (10,445) (4.2%) Operating Profit Domestic site leasing $ 646,364 $ 601,327 $ — $ 45,037 7.5% International site leasing 140,997 123,684 (22,667) 39,980 32.3% Site development 9,914 20,165 — (10,251) (50.8%) 28 Table of Contents Revenues Domestic site leasing revenues increased $42.3 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to (1) revenues from 208 towers acquired and 35 towers built since January 1, 2019 and (2) organic site leasing growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals. International site leasing revenues increased $21.2 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing revenues increased $54.7 million. These changes were primarily due to (1) revenues from 2,320 towers acquired and 516 towers built since January 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators. Site leasing revenue in Brazil represented 11.8% of total site leasing revenue for the period. No other individual international market represented more than 4% of our total site leasing revenue. Site development revenues decreased $32.7 million for the six months ended June 30, 2020, as compared to prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint. Operating Profit Domestic site leasing segment operating profit increased $45.0 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program. International site leasing segment operating profit increased $17.3 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $40.0 million. These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2019 and organic site leasing growth as noted above, (2) continued control of our site leasing cost of revenue, and (3) the positive impact of our ground lease purchase program. Site development segment operating profit decreased $10.3 million for the six months ended June 30, 2020, as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint. Selling, General, and Administrative Expenses: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 52,555 $ 56,086 $ — $ (3,531) (6.3%) International site leasing 16,966 13,998 (1,890) 4,858 34.7% Total site leasing $ 69,521 $ 70,084 $ (1,890) $ 1,327 1.9% Site development 8,950 12,591 — (3,641) (28.9%) Other 20,233 23,808 — (3,575) (15.0%) Total $ 98,704 $ 106,483 $ (1,890) $ (5,889) (5.5%) Selling, general, and administrative expenses decreased $7.8 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses decreased $5.9 million. These changes were primarily as a result of decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, back-office operating expenses, and travel related expenses. These decreases were partially offset by increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief. ‎ 29 Table of Contents Acquisition and New Business Initiatives Related Adjustments and Expenses: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 5,601 $ 1,980 $ — $ 3,621 182.9% International site leasing 2,832 2,996 (373) 209 7.0% Total $ 8,433 $ 4,976 $ (373) $ 3,830 77.0% Acquisition and new business initiatives related adjustments and expenses increased $3.5 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $3.8 million. These changes were primarily as a result of incremental costs incurred in support of new business initiatives. Asset Impairment and Decommission Costs: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 16,168 $ 12,449 $ — $ 3,719 29.9% International site leasing 4,429 2,942 (379) 1,866 63.4% Total $ 20,597 $ 15,391 $ (379) $ 5,585 36.3% Asset impairment and decommission costs increased $5.2 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, asset impairment and decommission costs increased $5.6 million. These changes were primarily as a result of a $8.8 million increase in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a $3.6 million decrease in the impairment charge recorded due to sites decommissioned in the six months ended June 30, 2020 compared to the prior year period. Depreciation, Accretion, and Amortization Expenses: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 268,375 $ 261,657 $ — $ 6,718 2.6% International site leasing 88,623 76,989 (14,912) 26,546 34.5% Total site leasing $ 356,998 $ 338,646 $ (14,912) $ 33,264 9.8% Site development 1,213 1,240 — (27) (2.2%) Other 3,074 2,716 — 358 13.2% Total $ 361,285 $ 342,602 $ (14,912) $ 33,595 9.8% Depreciation, accretion, and amortization expense increased $18.7 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $33.6 million. These changes were primarily due to an increase in the number of towers we acquired and built since January 1, 2019, partially offset by the impact of assets that became fully depreciated since the prior year period. ‎ 30 Table of Contents Operating Income (Expense): For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing $ 303,665 $ 269,155 $ — $ 34,510 12.8% International site leasing 28,147 26,759 (5,113) 6,501 24.3% Total site leasing $ 331,812 $ 295,914 $ (5,113) $ 41,011 13.9% Site development (249) 6,334 — (6,583) (103.9%) Other (23,307) (26,524) — 3,217 (12.1%) Total $ 308,256 $ 275,724 $ (5,113) $ 37,645 13.7% Domestic site leasing operating income increased $34.5 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to higher segment operating profit and a decrease in selling, general, and administrative expenses, partially offset by increases in depreciation, accretion, and amortization expense, asset impairment and decommission costs, and acquisition and new business initiatives related adjustments and expenses. International site leasing operating income increased $1.4 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, international site leasing operating income increased $6.5 million. These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, asset impairment and decommission costs, and acquisition and new business initiatives related adjustments and expenses. Site development operating income decreased $6.6 million for the six months ended June 30, 2020, as compared to the prior year, primarily due to lower segment operating profit driven by less activity from Sprint and T-Mobile , partially offset by a decrease in selling, general, and administrative expenses . Other Income (Expense): For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Interest income $ 1,584 $ 3,381 $ (220) $ (1,577) (46.6%) Interest expense (191,538) (196,114) (13) 4,589 (2.3%) Non-cash interest expense (4,743) (1,292) — (3,451) 267.1% Amortization of deferred financing fees (10,328) (10,176) — (152) 1.5% Loss from extinguishment of debt, net (16,864) — — (16,864) —% Other (expense) income, net (257,885) 12,254 (268,906) (1,233) (24.2%) Total $ (479,774) $ (191,947) $ (269,139) $ (18,688) 9.4% Interest income decreased $1.8 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, interest income decreased $1.6 million. These changes were primarily due to a lower amount of interest bearing domestic investments. Interest expense decreased $4.6 million for the six months ended June 30, 2020, as compared to the prior year. These changes were primarily due to a lower weighted average interest rate as compared to the prior year, partially offset by a higher average principal amount of cash-interest bearing debt outstanding as compared to the prior year. Non-cash interest expense increased $3.5 million for the six months ended June 30, 2020, as compared to the prior year primarily related to amortization on our interest rate swaps de-designated as cash flow hedges. Loss from extinguishment of debt was $16.9 million for the six months ended June 30, 2020 due to the payment of a $9.1 million call premium and the write-off of $7.7 million of the original issuance discount and financing fees related to the redemption of the 2014 Senior Notes. 31 Table of Contents Other (expense) income, net includes a $261.3 million loss on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries as well as a $3.2 million net gain on the change in fair value related to interest rate swaps not designated as hedges for the six months ended June 30, 2020. Other (expense) income, net includes a $7.0 million gain on the remeasurement of U.S. dollar denominated intercompany loans with foreign subsidiaries for the six months ended June 30, 2019. Benefit (Provision) for Income Taxes: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Benefit (provision) for income taxes $ 66,702 $ (25,815) $ 90,101 $ 2,416 (10.3%) Benefit for income taxes increased $92.5 million for the six months ended June 30, 2020, as compared to the prior year. On a constant currency basis, provision for income taxes decreased $2.4 million primarily due to a decrease in domestic and foreign income taxes partially offset by an increase in foreign withholding taxes. Net (Loss) Income: For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Net (loss) income $ (104,816) $ 57,962 $ (184,151) $ 21,373 39.5% Net loss was $104.8 million for the six months ended June 30, 2020, as compared to net income of $58.0 million in the prior year period. This change was primarily due to fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S. dollar denominated intercompany loans with foreign subsidiaries and a loss from extinguishment of debt in the current year period, partially offset by increases in operating income and benefit for income taxes.   NON-GAAP FINANCIAL MEASURES This report contains information regarding Adjusted EBITDA, a non-GAAP measure. We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to why management utilizes this measure. This report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, as well as by eliminating the impact of the remeasurement of our intercompany loans. Adjusted EBITDA We define Adjusted EBITDA as net income excluding the impact of non-cash straight-line leasing revenue, non-cash straight-line ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income and expenses, acquisition and new business initiatives related adjustments and expenses, asset impairment and decommission costs, interest income, interest expenses, depreciation, accretion, and amortization, and provision for or benefit from taxes. We believe that Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties to meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs. In addition, Adjusted EBITDA is similar to the measure of current financial performance generally used by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and the indentures relating to the 2016 Senior Notes, 2017 Senior Notes, and 2020 Senior Notes. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance. 32 Table of Contents For the three months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Net income $ 23,118 $ 31,973 $ (28,432) $ 19,577 74.7% Non-cash straight-line leasing revenue (346) (2,892) (55) 2,601 (89.9%) Non-cash straight-line ground lease expense 3,678 5,268 (16) (1,574) (29.9%) Non-cash compensation 18,579 24,487 (325) (5,583) (22.8%) Other expense (income), net 31,588 (12,762) 40,376 3,974 (107.6%) Acquisition and new business initiatives related adjustments and expenses 4,634 2,539 (249) 2,344 92.3% Asset impairment and decommission costs 6,242 9,620 (282) (3,096) (32.2%) Interest income (699) (1,581) 155 727 (46.0%) Total interest expense (1) 103,212 103,214 13 (15) (0.0%) Depreciation, accretion, and amortization 178,706 171,564 (9,548) 16,690 9.7% (Benefit) provision for income taxes (2) 55 15,808 (15,113) (640) (5.0%) Adjusted EBITDA $ 368,767 $ 347,238 $ (13,476) $ 35,005 10.1% For the six months ended Constant June 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Net (loss) income $ (104,816) $ 57,962 $ (184,151) $ 21,373 39.5% Non-cash straight-line leasing revenue (2,687) (5,537) (24) 2,874 (51.9%) Non-cash straight-line ground lease expense 7,527 11,357 (22) (3,808) (33.5%) Non-cash compensation 34,857 47,901 (660) (12,384) (25.9%) Loss from extinguishment of debt, net 16,864 — — 16,864 —% Other expense (income), net 257,885 (12,254) 268,906 1,233 24.2% Acquisition and new business initiatives related adjustments and expenses 8,433 4,976 (373) 3,830 77.0% Asset impairment and decommission costs 20,597 15,391 (379) 5,585 36.3% Interest income (1,584) (3,381) 220 1,577 (46.6%) Total interest expense (1) 206,609 207,582 13 (986) (0.5%) Depreciation, accretion, and amortization 361,285 342,602 (14,912) 33,595 9.8% (Benefit) provision for income taxes (2) (66,255) 26,211 (90,102) (2,364) (9.9%) Adjusted EBITDA $ 738,715 $ 692,810 $ (21,484) $ 67,389 9.7% (1) Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees. (2) (Benefit) provision for taxes includes $220 and $200 of franchise taxes for the three months ended June 30, 2020 and 2019, respectively, and $447 and $396 of franchise taxes for the six months ended June 30, 2020 and 2019, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations. Adjusted EBITDA increased $21.5 million for the three months ended June 30, 2020, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased $35.0 million. These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit. Adjusted EBITDA increased $45.9 million for the six months ended June 30, 2020, as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased $67.4 million. These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses. 33 Table of Contents LIQUIDITY AND CAPITAL RESOURCES SBAC is a holding company with no business operations of its own. SBAC’s only significant asset is 100% of the outstanding capital stock of SBA Telecommunications, LLC (“Telecommunications”), which is also a holding company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets. We conduct all of our business operations through Telecommunications’ subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries. A summary of our cash flows is as follows: For the six months ended June 30, 2020 June 30, 2019 (in thousands) Cash provided by operating activities $ 592,418 $ 466,106 Cash used in investing activities (413,970) (255,475) Cash used in financing activities (52,121) (264,463) Change in cash, cash equivalents, and restricted cash 126,327 (53,832) Effect of exchange rate changes on cash, cash equiv., and restricted cash (15,809) 2,344 Cash, cash equivalents, and restricted cash, beginning of period 141,120 178,300 Cash, cash equivalents, and restricted cash, end of period $ 251,638 $ 126,812 Operating Activities Cash provided by operating activities was $592.4 million for the six months ended June 30, 2020 as compared to $466.1 million for the six months ended June 30, 2019. The increase was primarily due to increases in site leasing segment operating profit and cash inflows associated with working capital changes primarily from timing of customer payments, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses. Investing Activities A detail of our investing activities is as follows: For the six months ended June 30, 2020 2019 (in thousands) Acquisitions of towers and related intangible assets $ (99,424) $ (125,412) Land buyouts and other assets (1) (19,611) (25,770) Construction and related costs on new builds (28,012) (28,150) Augmentation and tower upgrades (21,423) (28,825) Tower maintenance (15,180) (14,029) General corporate (2,364) (1,781) Net purchases of investments (225,026) (30,042) Other investing activities (2,930) (1,466) Net cash used in investing activities $ (413,970) $ (255,475) (1) Excludes $3.6 million and $6.7 million spent to extend ground lease terms for the six months ended June 30, 2020 and 2019, respectively. Subsequent to June 30, 2020, we acquired 25 towers and related assets and one data center for $61.6 million in cash. In addition, we agreed to purchase 100 additional sites for $42.0 million. For 2020, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $31.0 million to $41.0 million and discretionary cash capital expenditures, based on current or potential acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $325.0 million to $345.0 million. We expect to fund these cash capital expenditures from cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings. The exact amount of our future cash capital expenditures will 34 Table of Contents depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program. Financing Activities A detail of our financing activities is as follows: For the six months ended June 30, 2020 June 30, 2019 (in thousands) Net borrowings (repayments) under Revolving Credit Facility (1) $ (490,000) $ (245,000) Proceeds from Senior Notes, net of fees and original issue discount (1) 1,480,206 — Repayment of Senior Notes (1) (759,143) — Proceeds from employee stock purchase/stock option plans, net of taxes 37,316 87,921 Repurchase and retirement of common stock (2) (203,330) (94,572) Payment of dividends on common stock (104,171) — Other financing activities (12,999) (12,812) Net cash used in financing activities $ (52,121) $ (264,463) (1) For additional information regarding our debt instruments and financings, refer to the Debt Instruments and Debt Service Requirements below. (2) During the six months ended June 30, 2020, we repurchased 0.8 million shares of our Class A common stock for $200.0 million, at an average price per share of $242.86. Shares repurchased were retired. As of the date of this filing, we had $424.3 million of authorization remaining under the current stock repurchase plan. Dividend For the six months ended June 30, 2020, we paid the following cash dividends: Payable to Shareholders of Record At the Close Cash Paid Aggregate Amount Date Declared of Business on Per Share Paid Date Paid February 20, 2020 March 10, 2020 $0.465 $52.2 million March 26, 2020 May 5, 2020 May 28, 2020 $0.465 $52.0 million June 18, 2020 Subsequent to June 30, 2020, we declared the following cash dividends: Payable to Shareholders Cash to of Record At the Close be Paid Date Declared of Business on Per Share Date to be Paid August 3, 2020 August 25, 2020 $0.465 September 22, 2020 The amount of future distributions will be determined, from time to time, by our Board of Directors to balance our goal of increasing long-term shareholder value and retaining sufficient cash to implement our current capital allocation policy, which prioritizes investment in quality assets that meet our return criteria, and then stock repurchases when we believe our stock price is below its intrinsic value. The actual amount, timing and frequency of future dividends, will be at the sole discretion of our Board of Directors and will be declared based upon various factors, many of which are beyond our control. Registration Statements We have on file with the Commission a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets. During the six months ended June 30, 2020, we did not issue any shares of Class A common stock under this registration statement. As of June 30, 2020, we had approximately 1.2 million shares of Class A common stock remaining under this shelf registration statement. On March 5, 2018, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR. This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt 35 Table of Contents securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules governing automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of the amount and type of securities each time we issue securities under this registration statement. No securities were issued under this registration statement through the date of this filing. Debt Instruments and Debt Service Requirements Revolving Credit Facility under the Senior Credit Agreement The Revolving Credit Facility consists of a revolving loan under which up to $1.25 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 175.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 75.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance II is required to pay a commitment fee of between 0.20% and 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, April 11, 2023. The proceeds available under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of the period may not be reflective of the total amounts outstanding during such period. During the three months ended June 30, 2020, we borrowed $15.0 million and repaid $500.0 million of the outstanding balance under the Revolving Credit Facility. During the six months ended June 30, 2020, we borrowed $515.0 million and repaid $1.0 billion of the outstanding balance under the Revolving Credit Facility. As of June 30, 2020, we had no amount outstanding under the $1.25 billion Revolving Credit Facility. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.25% per annum on the amount of the unused commitment. As of June 30, 2020, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement. As of the date of this filing, we had no amount outstanding under the Revolving Credit Facility. Term Loan under the Senior Credit Agreement 2018 Term Loan On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement. The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025. The 2018 Term Loan accrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 75 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 175 basis points (with a zero Eurodollar Rate floor). As of June 30, 2020, the 2018 Term Loan was accruing interest at 1.93% per annum. Principal payments on the 2018 Term Loan are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $6.0 million. During the three and six months ended June 30, 2020, we repaid an aggregate of $6.0 million and $12.0 million of principal on the 2018 Term Loan, respectively. As of June 30, 2020, the 2018 Term Loan had a principal balance of $2.4 billion. On December 3, 2019, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, entered into a series of interest rate swaps on a portion of our 2018 Term Loan. As a result, we swapped $1.95 billion of notional value receiving interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per annum settled monthly through the maturity date of the 2018 Term Loan. On August 6, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, terminated interest rate swaps entered into in 2019 in exchange for a payment of $176.2 million. On the same date, we entered into an interest rate swap with $1.95 billion of notional value receiving interest at one month LIBOR for a fixed rate of 0.1239% per annum settled monthly through the maturity date of the 2018 Term Loan. Secured Tower Revenue Securities As of June 30, 2020, we, through a New York common law trust (the “Trust”), had issued and outstanding an aggregate of $5.0 billion of Secured Tower Revenue Securities (“Tower Securities”). The sole asset of the Trust consists of a non-recourse 36 Table of Contents mortgage loan made in favor of certain of our subsidiaries that are borrowers on the mortgage loan (the “Borrowers”) under which there is a loan tranche for each Tower Security outstanding with the same interest rate and maturity date as the corresponding Tower Security. The mortgage loan is secured by (1) mortgages, deeds of trust, and deeds to secure debt on a substantial portion of the tower sites, (2) a security interest in the tower sites and substantially all of the Borrowers’ personal property and fixtures, (3) the Borrowers’ rights under certain tenant leases, and (4) all of the proceeds of the foregoing. For each calendar month, SBA Network Management, Inc., an indirect subsidiary (“Network Management”), is entitled to receive a management fee equal to 4.5% of the Borrowers’ operating revenues for the immediately preceding calendar month. The table below sets forth the material terms of our outstanding Tower Securities: Security Issue Date Amount Outstanding Interest Rate Anticipated Repayment Date Final Maturity Date 2013-2C Tower Securities Apr. 18, 2013 $575.0 million 3.722% Apr. 11, 2023 Apr. 9, 2048 2014-2C Tower Securities Oct. 15, 2014 $620.0 million 3.869% Oct. 8, 2024 Oct. 8, 2049 2015-1C Tower Securities (1) Oct. 14, 2015 $500.0 million 3.156% Oct. 8, 2020 Oct. 10, 2045 2016-1C Tower Securities (1) Jul. 7, 2016 $700.0 million 2.877% Jul. 9, 2021 Jul. 10, 2046 2017-1C Tower Securities Apr. 17, 2017 $760.0 million 3.168% Apr. 11, 2022 Apr. 9, 2047 2018-1C Tower Securities Mar. 9, 2018 $640.0 million 3.448% Mar. 9, 2023 Mar. 9, 2048 2019-1C Tower Securities Sep. 13, 2019 $1.165 billion 2.836% Jan. 12, 2025 Jan. 12, 2050 (1) On July 14, 2020, we repaid the entire aggregate principal amounts of the 2015-1C Tower Securities and the 2016-1C Tower Securities in connection with the issuance of the 2020 Tower Securities (as defined below). As of June 30, 2020, the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement. On July 14, 2020, we, through the Trust, issued $750.0 million of 1.884% Secured Tower Revenue Securities Series 2020-1C which have an anticipated repayment date of January 9, 2026 and a final maturity date of July 11, 2050 (the “2020-1C Tower Securities”) and $600.0 million of 2.328% Secured Tower Revenue Securities Series 2020-2C which have an anticipated repayment date of January 11, 2028 and a final maturity date of July 9, 2052 (the “2020-2C Tower Securities”) (collectively the “2020 Tower Securities”). The aggregate $1.35 billion of 2020 Tower Securities have a blended interest rate of 2.081% and a weighted average life through the anticipated repayment date of 6.4 years. Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million). The remaining net proceeds of the 2020 Tower Securities were used for general corporate purposes. We have incurred deferred financing fees of $13.6 million to date in relation to this transaction which are being amortized through the anticipated repayment date of the 2020 Tower Securities. Risk Retention Tower Securities In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), SBA Guarantor, LLC, a wholly owned subsidiary, purchased (1) $40.0 million of Secured Tower Revenue Securities Series 2017-1R (the “2017-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.459% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2017-1C Tower Securities, (2) $33.7 million of Secured Tower Revenue Securities Series 2018-1R (the “2018-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.949% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2018-1C Tower Securities, (3) $61.4 million of Secured Tower Revenue Securities Series 2019-1R (the “2019-1R Tower Securities”) issued by the Trust with a fixed interest rate of 4.213% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2019-1C Tower Securities, and (4) $71.1 million of Secured Tower Revenue Securities Series 2020-2R (the “2020-2R Tower Securities”) issued by the Trust with a fixed interest rate of 4.336% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2020-2C Tower Securities. Principal and interest payments made on the 2017-1R Tower Securities, 2018-1R Tower Securities, 2019-1R Tower Securities, and 2020-2R Tower Securities eliminate in consolidation. ‎ 37 Table of Contents Senior Notes The table below sets forth the material terms of our outstanding senior notes: Senior Notes Issue Date Amount Outstanding Interest Rate Maturity Date Interest Due Dates % of Par Value 2016 Senior Notes Aug. 15, 2016 $1.1 billion 4.875% Sep. 1, 2024 Mar. 1 & Sep. 1 99.178% 2017 Senior Notes Oct. 13, 2017 $750.0 million 4.000% Oct. 1, 2022 Apr. 1 & Oct. 1 100.000% 2020-1 Senior Notes (1) Feb. 4, 2020 $1.0 billion 3.875% Feb. 15, 2027 Feb. 15 & Aug. 15 100.000% 2020-2 Senior Notes (1) May 26, 2020 $500.0 million 3.875% Feb. 15, 2027 Feb. 15 & Aug. 15 99.500% (1) On February 4, 2020, we issued $1.0 billion of unsecured senior notes at par value (the “2020-1 Senior Notes”), and on May 26, 2020, we issued $500.0 million of additional unsecured senior notes under the same indenture at 99.500% of par value (the “2020-2 Senior Notes”) (collectively, the “2020 Senior Notes”). Net proceeds from these offerings were used to redeem the entire $750.0 million outstanding principal amount of the 2014 Senior Notes, repay amounts outstanding under the Revolving Credit Facility, and for general corporate purposes. In addition, we paid a $9.1 million call premium and expensed $7.7 million for the write-off of the original issue discount and financing fees related to the redemption of the 2014 Senior Notes which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations. Interest on the 2020 Senior Notes begins August 15, 2020. We incurred financing fees of $17.3 million to date in relation to this transaction, which are being amortized through the maturity date. The 2020 Senior Notes are subject to redemption in whole or in part on or after February 15, 2023 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to February 15, 2023, we may, at our option, redeem up to 35% of the aggregate principal amount of the 2020 Senior Notes originally issued at a redemption price of 103.875% of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. We may redeem the 2020 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: February 15, 2023 at 101.938%, February 15, 2024 at 100.969%, or February 15, 2025 until maturity at 100.000%, of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. The unsecured senior notes are subject to redemption in whole or in part at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures. Debt Service As of June 30, 2020, we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months. The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as of June 30, 2020 and the interest rates accruing on those amounts on such date (in thousands): Revolving Credit Facility $ 3,125 2018 Term Loan (1) 105,469 2013-2C Tower Securities 21,585 2014-2C Tower Securities 24,185 2015-1C Tower Securities (2)(3) 504,559 2016-1C Tower Securities (3) 20,361 2017-1C Tower Securities 24,318 2018-1C Tower Securities 22,270 2019-1C Tower Securities 33,409 2016 Senior Notes 53,625 2017 Senior Notes 30,000 2020 Senior Notes 58,125 Total debt service for the next 12 months (3) $ 901,031 (1) Total debt service on the 2018 Term Loan includes the impact of interest rate swaps entered into in 2019 which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 3.78% per 38 Table of Contents annum through the maturity date of the 2018 Term Loan. Total debt service on the 2018 Term Loan excludes the impact of the interest rate swap entered into on August 6, 2020. (2) The anticipated repayment date and the final maturity date for the 2015-1C Tower Securities is October 8, 2020 and October 10, 2045, respectively. Interest expense included above is through the anticipated repayment date. (3) Total debt service excludes interest payments on the $1.35 billion 2020 Tower Securities issued July 14, 2020, proceeds from which were used to repay the entire aggregate principal amount of the 2015-1C Tower Securities ($500.0 million) and the 2016-1C Tower Securities ($700.0 million).