What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-04-29 compared with 2021-11-05 · 130 added, 349 removed, 295 unchanged (62% of the section changed)

1 unchanged sentence

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 97.5% of our total segment operating profit for the nine months ended September 30, 2021.

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 September 30, 2021, we owned 34,072 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.

In addition, we own and operate towers in South America, Central America, Canada, South Africa, the Philippines, and Tanzania.

Our primary business line is our site leasing business, which contributed 96.9% of our total segment operating profit for the three months ended March 31, 2022.

In our site leasing business, we (1) lease space to wireless service providers and other customers on assets that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements.

As of March 31, 2022, we owned 36,017 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.

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 September 30, 2021, no U.S.

As of March 31, 2022, no U.S.

state or territory accounted for more than 10% of our total tower portfolio by tower count, and no U.S.

state or territory accounted for more than 10% of our total revenues for the nine months ended September 30, 2021.

In addition, as of September 30, 2021, approximately 30% of our total towers are located in Brazil and no other international markets (each country is considered a market) represented more than 4% of our total towers.

We derive site leasing revenues primarily from wireless service provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, Tigo, and TIM.

state or territory accounted for more than 10% of our total revenues for the three months ended March 31, 2022.

In addition, as of March 31, 2022, approximately 30% of our total towers are located in Brazil and no other international markets (each country is considered a market) represented more than 4% of our total towers.

We derive site leasing revenues primarily from wireless service

provider tenants, including T-Mobile, AT&T, Verizon Wireless, Oi S.A., Telefonica, Claro, DISH Wireless, Tigo, 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 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 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.

In the United States and our international markets, our tenant leases are generally for an initial term of five years to 15 years with multiple renewal periods at the option of the tenant.

In the United States, Canada, and in our Central American markets, tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods.

In our South American markets, South Africa, and the Philippines, tenant leases typically escalate annually in accordance with an inflationary index.

In Tanzania, tenant leases typically escalate using a combination of fixed and inflation adjusted escalators.

Site leases in our South American markets typically provide for a fixed rental amount and a pass-through charge for the underlying rent related to ground leases and other property interests.

In South Africa, our site leases contain pass through charges related to utilities and, in Tanzania, our site leases include components related to utilities and fuel.

The utility and fuel portion of our Tanzanian site leases adjust periodically in accordance with changes in fuel and electricity prices.

In certain markets such as Brazil, tenant leases are typically governed by master lease agreements, which provide for the material terms and conditions that will govern the terms of the use of the site.

Cost of site leasing revenue primarily consists of:

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 Property insurance;

 Fuel (in those international markets that do not have an available electric grid at our tower sites);

 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 September 30, 2021, approximately 72% 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.

In the United States and our international markets, ground leases and other property interests are generally for an initial term of five years or more with multiple renewal periods, which are at our option.

In the United States, Canada, our Central American markets, and the Philippines, ground leases and other property interests provide for fixed rent escalators which typically average 2-3% annually, and in our South American markets and South Africa, ground leases adjust in accordance with an inflationary index.

As of March 31, 2022, 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.

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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.

In Brazil, Canada, Chile, South Africa, and the Philippines, 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, Peru, and Tanzania, 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.

As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit.

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For the three months ended

For the nine months ended

Segment operating profit as a percentage of

September 30,

total operating profit

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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.

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 2022, we expect organic site leasing revenue in both our domestic and international segments to increase over 2021 levels due in part to wireless carriers deploying unused spectrum.

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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 in 2019 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.

While the addition of a cash dividend to our capital allocation strategy in 2019 has provided us with a new tool to return value to our shareholders, we continue to believe that our priority is to make investments focused on increasing Adjusted Funds From Operations per share.

Key elements of our capital allocation strategy include:

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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

We have 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 or its variants, and methods taken to contain or treat the outbreak of COVID-19 including a vaccine distribution program.

While the full impact of COVID-19 is not yet known, we will continue to monitor these developments and the potential effects on our business.

Critical Accounting Policies and Estimates

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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.

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, 2021.

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.

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.

Reference Rate Reform

ASU 2020-04 and ASU 2021-01, Reference Rate Reform, provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

An entity may elect to apply the amendments prospectively through December 31, 2022.

The ICE Benchmark Administration Limited (“IBA”) intends to cease the publication of USD LIBOR as follows:

the 1 week and 2 month tenors on December 31, 2021 and all other tenors on June 30, 2023.

On July 7, 2021, we amended our Credit Facility to provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate.

Refer to “Debt Instruments and Debt Service Requirements” below for further discussion of the Credit Facility.

As of September 30, 2021, we have not modified any other contracts as a result of reference rate reform and are evaluating the impact this standard may have on our consolidated financial statements.

RESULTS OF OPERATIONS

This report presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates.

This report presents our financial results and other financial metrics on a GAAP basis and with respect to our international and consolidated results 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 realized and unrealized gains and losses on our intercompany loans.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Revenues and Segment Operating Profit:

For the three months ended

September 30,

Currency Impact

12 unchanged sentences

Site development

Domestic site leasing revenues increased $35.8 million for the three months ended September 30, 2021, as compared to the prior year, primarily due to (1) revenues from 858 towers acquired (including wireless tenant licenses on 710 utility transmission structures from the PG&E transaction) and 6 towers built since July 1, 2020 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 $12.9 million for the three months ended September 30, 2021, as compared to the prior year.

Domestic site leasing revenues increased $29.4 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to (1) revenues from 824 towers acquired (including wireless tenant licenses on 713 utility transmission structures from the PG&E transaction) and towers built since January 1, 2021 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 $24.9 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $22.7 million.

These changes were primarily due to (1) revenues from 222 towers acquired and 422 towers built since July 1, 2020 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals.

These changes were primarily due to (1) revenues from 1,974 towers acquired (including 1,445 towers under the deal with Airtel Tanzania) and 412 towers built since January 1, 2021 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals.

Site leasing revenue in Brazil represented 11.7% 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 increased $17.6 million for the three months ended September 30, 2021, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.

Site development revenues increased $16.7 million for the three months ended March 31, 2022, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH Wireless.

Operating Profit

Domestic site leasing segment operating profit increased $34.8 million for the three months ended September 30, 2021, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since July 1, 2020 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 $8.0 million for the three months ended September 30, 2021, as compared to the prior year.

Domestic site leasing segment operating profit increased $28.7 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 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 $13.8 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $12.3 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since July 1, 2020 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 increased $5.1 million for the three months ended September 30, 2021, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.

These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2021 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 increased $5.3 million for the three months ended March 31, 2022, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH Wireless.

Selling, General, and Administrative Expenses:

For the three months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Selling, general, and administrative expenses increased $2.8 million for the three months ended September 30, 2021, as compared to the prior year.

Selling, general, and administrative expenses increased $10.5 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, selling, general, and administrative expenses increased $10.7 million.

These changes were primarily as a result of an increase in personnel and other support related costs.

Acquisition and New Business Initiatives Related Adjustments and Expenses:

For the three months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

These changes were primarily as a result of an increase in non-cash compensation, personnel, and other support related costs due in part to our entry into new markets.

The decrease in Domestic site leasing and corresponding increases in International site leasing and Other selling, general, and administrative expenses are primarily due to changes in our internal cost allocations.

Asset Impairment and Decommission Costs:

For the three months ended

September 30,

Currency Impact

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International site leasing

Asset impairment and decommission costs increased $1.4 million for the three months ended September 30, 2021, as compared to the prior year.

This change was primarily as a result of a $1.2 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 and a $0.2 million increase in costs related to sites decommissioned in the third quarter of 2021 compared to the prior year period.

Asset impairment and decommission costs increased $3.6 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, asset impairment and decommission costs increased $3.5 million.

These changes were primarily as a result of an increase in impairment charges resulting from our regular analysis of whether the anticipated future discounted cash flows from certain towers are sufficient to recover the carrying value of the investment in those towers, partially offset by a decrease in costs related to sites decommissioned in the first quarter of 2022 compared to the prior year period.

Depreciation, Accretion, and Amortization Expense:

For the three months ended

September 30,

Currency Impact

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Site development

Depreciation, accretion, and amortization expense decreased $9.4 million for the three months ended September 30, 2021, as compared to the prior year.

Depreciation, accretion, and amortization expense decreased $9.6 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense decreased $10.4 million.

These changes were primarily due to the impact of assets that became fully depreciated since the prior year period, partially offset by an increase in the number of towers we acquired and built since July 1, 2020.

Operating Income (Expense):

For the three months ended

September 30,

Currency Impact

5 unchanged sentences

Site development

Domestic site leasing operating income increased $43.5 million for the three months ended September 30, 2021, as compared to the prior year, primarily due to higher segment operating profit and a decrease in depreciation, accretion, and amortization expense, partially offset by increases in selling, general, and administrative expenses and acquisition and new business initiatives related adjustments and expenses.

International site leasing operating income increased $2.8 million for the three months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $3.5 million.

This change was primarily due to higher segment operating profit, partially offset by increases in asset impairment and decommission costs and depreciation, accretion, and amortization expense.

Site development operating income increased $4.8 million for the three months ended September 30, 2021, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH .

Domestic site leasing operating income increased $45.4 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to higher segment operating profit, decreases in depreciation, accretion, and amortization expense and selling, general, and administrative expenses, partially offset by an increase in asset impairment and decommission costs.

International site leasing operating income decreased $1.5 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, international site leasing operating income decreased $2.2 million.

These changes were primarily due to increases in selling, general, and administrative expenses, depreciation, accretion, and amortization expense, and asset impairment and decommission costs, partially offset by higher segment operating profit.

Site development operating income increased $7.1 million for the three months ended March 31, 2022, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH Wireless .

Other Income (Expense):

For the three months ended

September 30,

Currency Impact

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Loss from extinguishment of debt, net

Other expense, net

Non-cash interest expense increased $3.5 million for the three months ended September 30, 2021, as compared to the prior year primarily related to amortization of accumulated losses related to our interest rate swaps de-designated as cash flow hedges.

Loss from extinguishment of debt was $2.6 million for the three months ended September 30, 2020 representing the write-off of unamortized financing fees related to the repayment of the 2015-1C Tower Securities and 2016-1C Tower Securities.

Other expense, net includes a $67.6 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended September 30, 2021, while the prior year period included a $38.6 million loss.

Benefit for Income Taxes:

For the three months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Benefit for income taxes

Benefit for income taxes increased $1.4 million for the three months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, benefit for income taxes decreased $8.0 million primarily due to an increase in deferred foreign taxes and deferred state taxes.

For the three months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Net income increased $25.1 million for the three months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, net income increased $45.7 million.

These changes were primarily due to an increase in operating income and a decrease in the loss on extinguishment of debt.

This was partially offset by a decrease in benefit for income taxes and an increase in non-cash interest expense.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Revenues and Segment Operating Profit:

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Site development

Cost of Revenues

Domestic site leasing

International site leasing

Site development

Operating Profit

Domestic site leasing

International site leasing

Site development

Domestic site leasing revenues increased $84.0 million for the nine months ended September 30, 2021, as compared to the prior year, primarily due to (1) revenues from 929 towers acquired (including wireless tenant licenses on 710 utility transmission structures from the PG&E transaction) and 16 towers built since January 1, 2020 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 $19.3 million for the nine months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, international site leasing revenues increased $25.2 million.

These changes were primarily due to (1) revenues from 236 towers acquired and 540 towers built since January 1, 2020 and (2) organic site leasing growth from new leases, amendments, and contractual escalators, partially offset by lease non-renewals.

Site leasing revenue in Brazil represented 11.2% 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 increased $63.2 million for the nine months ended September 30, 2021, as compared to prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.

Operating Profit

Domestic site leasing segment operating profit increased $81.7 million for the nine months ended September 30, 2021, as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built since January 1, 2020 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 $12.2 million for the nine months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, international site leasing segment operating profit increased $16.0 million.

These changes were primarily due to additional profit generated by (1) towers acquired and built since January 1, 2020 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 increased $15.4 million for the nine months ended September 30, 2021, as compared to the prior year, as a result of increased carrier activity driven primarily by T-Mobile and DISH.

Selling, General, and Administrative Expenses:

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Site development

Selling, general, and administrative expenses increased $9.7 million for the nine months ended September 30, 2021, as compared to the prior year.

This change was primarily as a result of an increase in personnel and other support related costs.

Acquisition and New Business Initiatives Related Adjustments and Expenses:

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Acquisition and new business initiatives related adjustments and expenses increased $5.0 million for the nine months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, acquisition and new business initiatives related adjustments and expenses increased $2.7 million.

These changes were primarily as a result of an increase in third party acquisition and integration costs as well as incremental costs incurred in support of new business initiatives as compared to the prior year.

Asset Impairment and Decommission Costs:

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Asset impairment and decommission costs decreased $10.5 million for the nine months ended September 30, 2021, as compared to the prior year.

This change was primarily as a result of a $9.9 million decrease 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 and a $0.7 million decrease related to sites decommissioned in the nine months ended September 30, 2021 compared to the prior year period.

Depreciation, Accretion, and Amortization Expenses:

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Site development

Depreciation, accretion, and amortization expense decreased $11.3 million for the nine months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, depreciation, accretion, and amortization expense decreased $8.5 million.

This change was primarily due to the impact of assets that became fully depreciated since the prior year period, partially offset by an increase in the number of towers we acquired and built since January 1, 2020.

Operating Income (Expense):

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Domestic site leasing

International site leasing

Total site leasing

Site development

Domestic site leasing operating income increased $94.4 million for the nine months ended September 30, 2021, as compared to the prior year, primarily due to higher segment operating profit and decreases in depreciation, accretion, and amortization expense and asset impairment and decommission costs, partially offset by increases in selling, general, and administrative expenses and acquisition and new business initiatives related adjustments and expenses.

International site leasing operating income increased $8.8 million for the nine months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, international site leasing operating income increased $12.4 million.

These changes were primarily due to higher segment operating profit and a decrease in asset impairment and decommission costs, partially offset by an increase in depreciation, accretion, and amortization expense.

Site development operating income increased $14.4 million for the nine months ended September 30, 2021, as compared to the prior year, primarily due to higher segment operating profit driven by more activity from T-Mobile and DISH , partially offset by an increase in selling, general, and administrative expenses .

Other Income (Expense):

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Interest income

Interest expense

Non-cash interest expense

Amortization of deferred financing fees

Loss from extinguishment of debt, net

Other expense, net

Interest expense decreased $11.5 million for the nine months ended September 30, 2021, as compared to the prior year primarily due to a lower weighted average interest rate due in part to the interest rate swap entered into during third quarter of 2020, partially offset by a higher average principal amount of cash interest bearing debt outstanding.

Non-cash interest expense increased $22.4 million for the nine months ended September 30, 2021, as compared to the prior year primarily related to amortization of accumulated losses related to our interest rate swaps de-designated as cash flow hedges.

Loss from extinguishment of debt was $13.7 million for the nine months ended September 30, 2021 representing the payment of a $7.5 million call premium and the write-off of $4.2 million of the unamortized financing fees related to the redemption of the 2017 Senior Notes in February 2021, as well as the write-off of $2.0 million of unamortized financing fees related to the repayment of the 2017-1C in May 2021.

Loss from extinguishment of debt was $19.5 million for the nine months ended September 30, 2020 representing the payment of a $9.1 million call premium and the write-off of $7.7 million of the original issuance discount and unamortized financing fees related to the redemption of the 2014 Senior Notes in February 2020, as well as the write-off of $2.6 million of unamortized financing fees related to the repayment of the 2015-1C Tower Securities and 2016-1C Tower Securities in July 2020.

Other expense, net includes a $42.6 million loss on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the nine months ended September 30, 2021, while the prior year period included a $299.9 million loss.

Other income (expense), net

Interest income increased $1.9 million for the three months ended March 31, 2022, as compared to the prior year.

This change was primarily due to a higher amount of interest-bearing deposits held in Brazil and higher effective interest rates on those deposits as compared to the prior year.

Interest expense decreased $7.8 million for the three months ended March 31, 2022, as compared to the prior year.

This change was primarily due to a lower weighted average interest rate, partially offset by a higher average principal amount of cash-interest bearing debt outstanding.

Loss from extinguishment of debt was $11.7 million for the three months ended March 31, 2021 representing the payment of a $7.5 million call premium and the write-off of $4.2 million of unamortized financing fees related to the repayment of the 2017 Senior Notes in February 2021.

Other expense, net includes a $109.6 million gain on the remeasurement of U.S.

dollar denominated intercompany loans with foreign subsidiaries for the three months ended March 31, 2022, while the prior year period included a $86.3 million loss.

(Provision) Benefit for Income Taxes:

For the nine months ended

September 30,

For the three months ended

Currency Impact

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(Provision) benefit for income taxes

Provision for income taxes increased $91.6 million for the nine months ended September 30, 2021, as compared to the prior year.

On a constant currency basis, provision for income taxes increased $6.1 million.

This change was primarily due to increases in deferred foreign taxes as well as current and deferred state taxes.

Provision for income taxes increased $61.4 million for the three months ended March 31, 2022, as compared to the prior year primarily due to fluctuations in foreign currency exchange rates, partially offset by a decrease in deferred foreign taxes.

Net Income (Loss):

For the nine months ended

September 30,

For the three months ended

Currency Impact

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Net income (loss)

Net income was $188.7 million for the nine months ended September 30, 2021, as compared to net loss of $82.1 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, an increase in operating income, and decreases in cash interest expense related to the interest rate swaps and loss from extinguishment of debt.

This was partially offset by increases in non-cash interest expense and provision for income taxes .

Net income increased $200.1 million for the three months ended March 31, 2022, as compared to the prior year.

On a constant currency basis, net income increased $71.9 million.

These changes were primarily due to an increase in operating income and decreases in loss from extinguishment of debt and cash interest expense, partially offset by an increase in provision for income taxes.

NON-GAAP FINANCIAL MEASURES

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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.

As discussed above, this report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates.

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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 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, 2020 Senior Notes, and 2021 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.

For the three months ended

September 30,

Currency Impact

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(in thousands)

Non-cash straight-line leasing revenue

Non-cash straight-line ground lease expense

Non-cash compensation

Loss from extinguishment of debt, net

Other expense, net

Acquisition and new business initiatives

related adjustments and expenses

Asset impairment and decommission costs

Interest income

Total interest expense (1)

Depreciation, accretion, and amortization

Benefit for income taxes (2)

Adjusted EBITDA

For the nine months ended

September 30,

Currency Impact

Currency Change

(in thousands)

Net income (loss)

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Loss from extinguishment of debt, net

Other expense, net

Other (income) expense, net

Acquisition and new business initiatives

2 unchanged sentences

Interest income

Total interest expense (1)

Interest expense (1)

Depreciation, accretion, and amortization

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(1) Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2) Provision (benefit) for taxes includes $229 and $235 of franchise taxes for the three months ended September 30, 2021 and 2020, respectively, and $684 and $682 of franchise taxes for the nine months ended September 30, 2021 and 2020, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $33.7 million for the three months ended September 30, 2021, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $31.6 million.

These changes were primarily due to an increase in segment operating profit, partially offset by an increase in cash selling, general, and administrative expenses.

Adjusted EBITDA increased $85.2 million for the nine months ended September 30, 2021, as compared to the prior year period.

(2) Provision (benefit) for taxes includes $1,234 and $220 of franchise taxes for the three months ended March 31, 2022 and 2021, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations.

Adjusted EBITDA increased $33.7 million for the three months ended March 31, 2022, as compared to the prior year period.

On a constant currency basis, Adjusted EBITDA increased $32.0 million.

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A summary of our cash flows is as follows:

For the nine months ended September 30,

For the three months ended March 31,

(in thousands)

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Cash used in investing activities

Cash provided by (used in) financing activities

Cash (used in) provided by financing activities

Change in cash, cash equivalents, and restricted cash

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Operating Activities

Cash provided by operating activities was $891.3 million for the nine months ended September 30, 2021 as compared to $882.9 million for the nine months ended September 30, 2020.

The increase was primarily due to an increase in segment operating profit, partially offset by an increase in cash outflows associated with working capital changes.

Cash provided by operating activities was $292.5 million for the three months ended March 31, 2022 as compared to $285.5 million for the three months ended March 31, 2021.

The increase was primarily due to an increase in operating profit, partially offset by an increase in cash outflows associated with working capital changes.

Investing Activities

A detail of our cash capital expenditures is as follows:

For the nine months ended September 30,

For the three months ended March 31,

(in thousands)

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Land buyouts and other assets (3)

Construction and related costs on new builds

Construction and related costs

Augmentation and tower upgrades

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Net cash used in investing activities

(1) During the nine months ended September 30, 2021, we acquired the exclusive right to lease and operate 710 utility transmission structures, which included existing wireless tenant licenses from PG&E.

The difference between the agreed upon purchase price of $969.9 million and the cash acquisition amount is due to working capital adjustments.

(2) Excludes $11.3 million and $5.9 million spent to extend ground lease terms for the nine months ended September 30, 2021 and 2020, respectively.

The nine months ended September 30, 2020 includes amounts paid related to the acquisition of data centers.

Subsequent to September 30, 2021, we purchased or are under contract to purchase approximately 1,700 communication sites for an aggregate consideration of approximately $231.0 million in cash, including approximately 1,400 sites for approximately $175.0 million in cash relating to the previously announced deal to acquire towers from Airtel Tanzania.

(1) During the three months ended March 31, 2022, we closed on 1,445 sites under the previously announced deal with Airtel Tanzania for $176.1 million.

Legal title was fully transferred at closing for 963 of the towers.

The remaining 482 towers are pending post-closing site level documentation and due diligence and were initially accounted for as acquired and other right-of-use assets, net on the consolidated balance sheet until transfer of title for these towers is completed, which we anticipate to be in tranches through the end of the second quarter of 2023.

Upon legal transfer, these assets will be reclassified to tower related assets.

During this period of time, we have all the economic rights and obligations related to these towers.

(2) During the three months ended March 31, 2021, we acquired the exclusive right to lease and operate 697 utility transmission structures, which included existing wireless tenant licenses from PG&E for $954.0 million .

The difference between the purchase price and the cash acquisition amount is due to working capital adjustments.

(3) Excludes $3.8 million and $2.8 million spent to extend ground lease terms for the three months ended March 31, 2022 and 2021, respectively.

Subsequent to March 31, 2022, we purchased, or are under contract to purchase, 358 communication sites and one data center for an aggregate consideration of $177.1 million in cash.

For 2022, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $47.0 million to $57.0 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 $615.0 million to $635.0 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 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.

We expect to fund these cash capital expenditures from, among other sources, 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 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 nine months ended September 30,

For the three months ended March 31,

(in thousands)

Net repayments under Revolving Credit Facility (1)

Net borrowings under Revolving Credit Facility (1)

Proceeds from issuance of Senior Notes, net of fees (1)

Repayment of Senior Notes (1)

Proceeds from issuance of Tower Securities, net of fees (1)

Repayment of Tower Securities (1)

Repurchase and retirement of common stock (2)

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Proceeds from employee stock purchase/stock option plans, net of taxes

Termination of interest rate swap

Other financing activities

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

(1) For additional information regarding our debt instruments and financings, refer to “Debt Instruments and Debt Service Requirements” below.

(2) On October 28, 2021, our Board of Directors authorized a new $1.0 billion stock repurchase plan, replacing the prior plan authorized on November 2, 2020.

(2) For additional information, refer to Item 2.

Issuer Purchases of Equity Securities.

For the nine months ended September 30, 2021, we paid the following cash dividends:

For the three months ended March 31, 2022, we paid the following cash dividends:

Payable to Shareholders

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March 25, 2022

April 26, 2021

$63.4 million

June 15, 2021

August 1, 2021

August 26, 2021

$63.6 million

September 23, 2021

Dividends paid in 2021 and 2020 were ordinary dividends.

Subsequent to September 30, 2021, we declared the following cash dividends:

Dividends paid in 2022 were ordinary taxable dividends.

Subsequent to March 31, 2022, we declared the following cash dividends:

Payable to Shareholders

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Date to be Paid

November 1, 2021

November 18, 2021

December 16, 2021

April 24, 2022

June 14, 2022

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.

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We have on file with the Securities and Exchange Commission (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.

nine months ended September 30, 2021, we did not issue any shares of Class A common stock under this registration statement.

As of September 30, 2021, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

On February 26, 2021, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3, which enables us to issue shares of our Class A common stock, preferred stock, debt securities, warrants, or depositary shares as well as units that include any of these securities.

We will file a prospectus supplement containing the amount and type of securities each time we issue securities under our automatic shelf registration statement on Form S-3.

During the three months ended March 31, 2022, we did not issue any shares of Class A common stock under this registration statement.

As of March 31, 2022, we had approximately 1.2 million shares of Class A common stock remaining under this registration statement.

We have on file with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR, which enables us to issue shares of our Class A common stock, preferred stock, debt securities, warrants, or depositary shares

as well as units that include any of these securities.

We will file a prospectus supplement containing the amount and type of securities each time we issue securities under our automatic shelf registration statement on Form S-3ASR.

No securities were issued under this registration statement through the date of this filing.

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Revolving Credit Facility under the Senior Credit Agreement

On July 7, 2021, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, amended our Revolving Credit Facility to (1) increase the total commitments under the Facility from $1.25 billion to $1.5 billion, (2) extend the maturity date of the Facility to July 7, 2026, (3) lower the applicable interest rate margins and commitment fees under the Facility, (4) provide mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate, (5) incorporate sustainability-linked targets which will adjust the Facility’s applicable interest and commitment fee rates upward or downward based on how we perform against those targets, and (6) amend certain other terms and conditions under the Senior Credit Agreement.

As amended, the Revolving Credit Facility consists of a revolving loan under which up to $1.5 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.

The Revolving Credit Facility consists of a revolving loan under which up to $1.5 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 150.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 50.0 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 0.15% and 0.25% per annum on the amount of unused commitment.

In addition, SBA Senior Finance II LLC, our wholly owned subsidiary (“SBA Senior Finance II”) is required to pay a commitment fee of between 0.15% 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, July 7, 2026.

Furthermore, the Revolving Credit Facility provides mechanics relating to a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by an alternative benchmark rate and incorporates sustainability-linked targets which will adjust the Facility’s applicable interest and commitment fee rates upward or downward based on how the Company performs against those targets.

Borrowings under the Revolving Credit Facility may be used for general corporate purposes.

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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 September 30, 2021, we repaid $85.0 million of the outstanding balance under the Revolving Credit Facility.

During the nine months ended September 30, 2021, we borrowed $810.0 million and repaid $1.2 billion of the outstanding balance under the Revolving Credit Facility.

As of September 30, 2021, there was no balance outstanding under the Revolving Credit Facility.

Subsequent to March 31, 2022, the Company received a 0.05% reduction in the applicable spread and a 0.01% reduction in the commitment fee as a result of meeting certain sustainability-linked targets as of December 31, 2021.

During the three months ended March 31, 2022, we borrowed $330.0 million of the outstanding balance under the Revolving Credit Facility.

As of March 31, 2022, there was $680.0 million outstanding under the Revolving Credit Facility accruing interest at 1.619%.

In addition, SBA Senior Finance II was required to pay a commitment fee of 0.15% per annum on the amount of the unused commitment.

As of September 30, 2021, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Subsequent to September 30, 2021, we borrowed $825.0 million and repaid $755.0 million of the outstanding balance under the Revolving Credit Facility.

As of the date of this filing, $70.0 million was outstanding under the Revolving Credit Facility.

As of March 31, 2022, SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Subsequent to March 31, 2022, we repaid an additional $110.0 million under the Revolving Credit Facility, and as of the date of this filing, $570.0 million was outstanding.

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 term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement.

On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II, obtained a 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.

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The 2018 Term Loan was issued at 99.75% of par value.

As of September 30, 2021, the 2018 Term Loan was accruing interest at 1.840% 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 nine months ended September 30, 2021, we repaid an aggregate of $6.0 million and $18.0 million of principal on the 2018 Term Loan, respectively.

As of September 30, 2021, the 2018 Term Loan had a principal balance of $2.3 billion.

As of March 31, 2022, the 2018 Term Loan was accruing interest at 2.210% per annum.

On August 4, 2020, we, through our wholly owned subsidiary, SBA Senior Finance II, entered into an interest rate swap for $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.

During the three months ended March 31, 2022, we repaid an aggregate of $6.0 million of principal on the 2018 Term Loan.

As of March 31, 2022, the 2018 Term Loan had a principal balance of $2.3 billion.

Secured Tower Revenue Securities

2021 -1C Tower Securities

On May 14, 2021 , we , through a New York common law trust (the “Trust”) , issued $1.165 billion of Secured Tower Revenue Securities Series 2021-1C, which have an anticipated repayment date of November 9, 2026 and a final maturity date of May 9, 2051 (the “2021-1C Tower Securities ”).

The fixed interest rate on the 2021-1C Tower Securities is 1.631% per annum, payable monthly.

Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2017-1C Tower Securities ($760.0 million) and the Secured Tower Revenue Securities, Series 2017-1R ($40.0 million) and for general corporate purposes.

We have incurred deferred financing fees of $12.6 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2021-1C Tower Securities.

2013-2C Tower Securities

On October 14, 2021, we repaid the entire aggregate principal amount of the 2013-2C Tower Securities ($575.0 million) which had an anticipated repayment date of April 11, 2023.

Additionally, we expensed $2.0 million of deferred financing fees and accrued interest related to the repayment of the 2013-2C Tower Securities, which are reflected in loss from extinguishment of debt on the Consolidated Statement of Operations.

2021 -2C Tower Securities and 2021-3C Tower Securities

On October 27, 2021 , we , through the Trust, issued $895.0 million of 1.840% Secured Tower Revenue Securities Series 2021-2C which have an anticipated repayment date of April 9, 2027 and a final maturity date of October 10, 2051 (the “2021-2C Tower Securities ”) and $895.0 million of 2.593% Secured Tower Revenue Securities Series 2021-3C which have an anticipated repayment date of October 9, 2031 and a final maturity date of October 10, 2056 (the “2021-3C Tower Securities ”).

The aggregate $1.79 billion of 2021-2C Tower Securities and 2021-3C Tower Securities have a blended interest rate of 2.217% and a weighted average life through the anticipated repayment date of 7.8 years.

Net proceeds from this offering were used to repay amounts outstanding under the Revolving Credit Facility and remaining proceeds will be used to redeem the entire aggregate principal amount of the 2016 Senior Notes ($1.1 billion) and to pay all premiums and costs associated with such redemption.

We have incurred deferred financing fees of $18.3 million in relation to this transaction, which are being amortized through the anticipated repayment dates of the 2021-2C Tower Securities and 2021-3C Tower Securities.

Tower Revenue Securities Terms

As of September 30, 2021, we, through the Trust, had issued and outstanding an aggregate of $5.5 billion of Secured Tower Revenue Securities (“Tower Securities”).

As of March 31, 2022, we, through the Trust, had issued and outstanding an aggregate of $6.7 billion of Secured Tower Revenue Securities (“Tower Securities”).

The sole asset of the Trust consists of a non-recourse 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 will be paid from the operating cash flows from the aggregate 9,929 tower sites owned by the Borrowers as of September 30, 2021.

The mortgage loan will be paid from the operating cash flows from the aggregate 9,903 tower sites owned by the Borrowers as of March 31, 2022.

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.

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2019-1C Tower Securities

$640.0 million

2019-1C Tower Securities

$1.165 billion

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$895.0 million

(1) On October 14, 2021, we repaid the entire aggregate principal amount of the 2013-2C Tower Securities.

For further discussion, refer to “Secured Tower Revenue Securities” above.

(2) On October 27, 2021, we issued the 2021-2C Tower Securities and the 2021-3C Tower Securities.

Net proceeds were used to repay amounts outstanding under the Revolving Credit Facility and remaining proceeds will be used to redeem the entire aggregate principal amount of the 2016 Senior Notes.

For further discussion, refer to “Secured Tower Revenue Securities” above and “Senior Notes” below.

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) $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, (2) $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, (3) $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, (4) $61.4 million of Secured Tower Revenue Securities Series 2021-1R (the “2021-1R Tower Securities”) issued by the Trust with a fixed interest rate of 3.625% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-1C Tower Securities, and (5) $94.3 million of Secured Tower Revenue Securities Series 2021-3R (the “2021-3R Tower Securities”) issued by the Trust with a fixed interest rate of 4.090% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-3C Tower Securities.

In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Exchange Act, SBA Guarantor, LLC, a wholly owned subsidiary, purchased (1) $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, (2) $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, (3) $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, (4) $61.4 million of Secured Tower Revenue Securities Series 2021-1R (the “2021-1R Tower Securities”) issued by the Trust with a fixed interest rate of 3.625% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-1C Tower Securities, and (5) $94.3 million of Secured Tower Revenue Securities Series 2021-3R (the “2021-3R Tower Securities”) issued by the Trust with a fixed interest rate of 4.090% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2021-3C Tower Securities.

Principal and interest payments made on the 2018-1R Tower Securities, 2019-1R Tower Securities, 2020-2R Tower Securities, 2021-1R Tower Securities, and 2021-3R Tower Securities eliminate in consolidation.

As of September 30, 2021, 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 January 29, 2021, we issued $1.5 billion of unsecured senior notes due February 1, 2029 at par value (the “2021 Senior Notes”).

The 2021 Senior Notes accrue interest at a rate of 3.125% per annum.

Interest on the 2021 Senior Notes is due semi-annually on February 1 and August 1 of each year, beginning on August 1, 2021.

We incurred financing fees of $14.5 million to date in relation to this transaction, which are being amortized through the maturity date.

Net proceeds from this offering were used to redeem all of the outstanding principal amount of the 2017 Senior Notes, repay the amounts outstanding under the Revolving Credit Facility, and for general corporate purposes.

The 2021 Senior Notes are subject to redemption in whole or in part on or after February 1, 2024 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest.

Prior to February 1, 2024, we may, at our option, redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes originally issued at a redemption price of 103.125% of the principal amount of the 2021 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 2021 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices:

February 1, 2024 at 101.563%, February 1, 2025 at 100.781%, or February 1, 2026 until maturity at 100.000%, of the principal amount of the 2021 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

The table below sets forth the material terms of our outstanding senior notes as of September 30, 2021:

As of March 31, 2022, 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.

The table below sets forth the material terms of our outstanding senior notes as of March 31, 2022:

Amount Outstanding

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2021 Senior Notes

(1) Proceeds from the issuance of the 2021-2C Tower Securities and 2021-3C Tower Securities will be used to redeem the entire aggregate principal amount of the 2016 Senior Notes.

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.

Each of our senior notes is subject to redemption, at our option, in whole or in part on or after the date set forth above.

We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.

As of September 30, 2021, 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 September 30, 2021 and the interest rates accruing on those amounts on such date (in thousands):

As of March 31, 2022, 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 March 31, 2022 and the interest rates accruing on those amounts on such date (in thousands):

Revolving Credit Facility (1)

7 unchanged sentences

2021-2C Tower Securities

2016 Senior Notes (4)

2021-3C Tower Securities

2020 Senior Notes

1 unchanged sentence

Total debt service for the next 12 months

(1) As of September 30, 2021, no amount was outstanding under the Revolving Credit Facility.

Subsequent to September 30, 2021, we borrowed $825.0 million and repaid $755.0 million of the outstanding balance under the Revolving Credit Facility.

As of the date of this filing, $70.0 million was outstanding under the Revolving Credit Facility.

(1) As of March 31, 2022, $680.0 million was outstanding under the Revolving Credit Facility.

Subsequent to March 31, 2022, we repaid an additional $110.0 million under the Revolving Credit Facility, and as of the date of this filing, $570.0 million was outstanding.

(2) Total debt service on the 2018 Term Loan includes the impact of the interest rate swap entered into on August 4, 2020, which swapped $1.95 billion of notional value accruing interest at one month LIBOR plus 175 basis points for a fixed rate of 1.874% per annum through the maturity date of the 2018 Term Loan.

(3) On October 14, 2021, we repaid the entire aggregate principal amount of the 2013-2C Tower Securities ($575.0 million).

For further discussion, refer to “Secured Tower Revenue Securities” above.

(4) Total debt service excludes interest payments on the $895.0 million 2021-2C Tower Securities and the $895.0 million 2021-3C Tower Securities issued October 27, 2021, proceeds from which were used to repay amounts outstanding under the Revolving Credit Facility and remaining proceeds will be used to redeem the entire aggregate principal amount of the 2016 Senior Notes ($1.1 billion).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis