Radius Global Infrastructure (NASDAQ: RADI) one of the largest ground lease aggregators, owning property interests that are leased to wireless carriers and tower companies, today reported its full-year 2020 results. At year-end 2020, Radius owned a portfolio of 5.4k sites in 19 countries, which together comprises $84.1m in annualized in-place rent.
Annualized In-Place Rent – Radius Global Infrastructure
Notably, the company’s annualized in-place rent of $84.1m has increased 35% year-over-year, from $62.1m as of year-end 2019. This is a result of both organic growth (e.g., rental escalators) and inorganic growth (i.e., acquisition of new property interests).
Acquisition Capital Expenditures – Radius Global Infrastructure
In 2020, Radius Global Infrastructure acquired $18.5m in rents across 918 sites. Including both acquisition capital expenditures of $220.8m and origination SG&A of $35.4m, the company’s total acquisition costs were $256.1m. Therefore, Radius was able to generate a 7.2% initial yield on its origination activity for 2020.
Radius Global Infrastructure – Overview
Radius Global Infrastructure owns property interests in the United States, Australia, Belgium, Brazil, Canada, Chile, Colombia, France, Germany, Hungary, Ireland, Italy, Mexico, Netherlands, Portugal, Romania, Spain, the United Kingdom, and Turkey. The company acquires these real property interests in the land underlying a wireless tower or antennae.
Specifically, these property interests take the form of easements, usufructs, leasehold & sub-leasehold interests, and fee simple interests. Each form of property interest gives Radius the right to receive all communications rents relating to a property which it leases to a tenant.
Tenant Base
As of year-end 2020, Radius Global Infrastructure’s top 20 tenants represented 82% of its annualized in-place rents. Of those 20 tenants, 80% of them, based on annualized in-place rents, had an investment grade credit rating. Additionally, in aggregate, the Radius tenant base comprises 70% wireless carriers and 30% tower companies. Specifically, these tenants include:
- Wireless Carriers: AT&T, Verizon, Telefónica, Orange, Telstra, and Vodafone
- Tower Companies: American Tower, Crown Castle, Cellnex, and Vantage Towers
Tenant Leases
Overall, Radius Global Infrastructure’s ground leases have a weighted average remaining lease term of 9 years and a significant portion have built-in annual rental escalators of 2% to 3%.
Asset Terms
The terms of Radius’ real property interests generally range from 30 years to 99 years. These real property interests provide the company with the right to receive the future income from future tenant lease rental payments.
Overall, at year-end 2020, the average remaining term of the company’s real property interests varied by geography as follows: i) North America at 49.6 years, ii) Europe at 55.1 years, and South America at 27.2 years.
Competition – Tower Companies and Ground Lease Aggregators
Competition for the acquisition of real property interests underlying digital infrastructure typically comes from two types of companies. Radius Global Infrastructure competes with both its tenants (i.e., tower companies) and other ground lease aggregators.
Firstly, tower companies including American Tower, Crown Castle, and SBA Communications often purchase ground leases under their own towers. Secondly, independent ground lease aggregators include Landmark Infrastructure (NASDAQ: LMRK), Everest Infrastructure Partners, and Melody Wireless Infrastructure (Melody Capital).
Below is an illustration from Radius Global Infrastructure’s operating business, APWireless. Specifically, the diagram depicts the relationship between the ground lease aggregator, tower company, and wireless carrier.
