Four Reasons Why SBA Communications Is Ripe for a Price Correction

Charlie Bottle submits:

Unbelievably, there are still real estate businesses yielding 5% cap rates, and investors gullible enough to accept this.

SBA Communications (SBAC) owns and leases cell tower sites to cellular operators with multi-year long term (often 10 or more) triple net leases. Its business is effectively industrial real estate with predictable cash-flows. SBAC and its competitors allow cellular operators to keep these assets and its financing off balance sheets, and in some cases share the cost among different carriers. The separation of the real estate and the cellular service operation business should, in theory, allow catering the businesses to different types of investors and therefore reduce overall cost of capital.

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Tags: business, carrier, carriers, cell tower, LEC, telecom

This entry was posted on Monday, February 2nd, 2009 at 9:50 am and is filed under Seeking Alpha. You can follow any responses to this entry through the RSS 2.0 feed.