Radius Global Infrastructure (NASDAQ: RADI), a ground lease aggregator, owning property interests that are leased to wireless carriers and tower companies, today announced its Q3 2021 results, through which the company disclosed plans to deploy at least $400m of acquisition capital expenditures during 2022 to grow its in-place rents.

Financial Performance in Q3 2021 – Radius Global Infrastructure

In Q3 2021, Radius Global reported revenue of $27.5m, a 10% increase quarter-over-quarter, and adjusted EBITDA of $8.4m, a 12% increase quarter-over-quarter. Therefore, the company’s EBITDA margin was 30.6% in Q3 2021, a ~60 bps improvement quarter-over-quarter.

Operational Performance in Q3 2021 – Radius Global Infrastructure

Portfolio

As of Q3 2021, Radius owned a portfolio of 6.0k sites in 21 countries, which together comprise $110.4m of annualized in-place rents. During the quarter, the company expanded its communications sites portfolio into two new countries, namely Greece and Uruguay.

Annualized In-Place Rents – Q3 2021
Annualized In Place Rent Radius Global Infrastructure Q3 2021

The company’s annualized in-place rents of $110.4m increased 7.8% quarter-over-quarter, from $102.4m as of Q2 2021. This is a result of both organic growth (e.g., rental escalators) and inorganic growth (i.e., acquisition of new property interests).

Asset Origination

In Q3 2021, Radius Global Infrastructure acquired $8.9m in rent across 163 sites. Including both acquisition capital expenditures of $126.5m and origination SG&A of $12.2m, Radius’ total Q3 2021 acquisition costs were $138.7m. Therefore, the company was able to generate a 6.4% initial yield on its origination activity for Q3 2021.

Acquisition Capital Expenditures – Q3 2021
Acquisition Capex Radius Global Infrastructure Q3 2021

As shown above, Radius’ acquisition capital expenditures were $360m for the nine-months ended September 30, 2021.

Additionally, Radius’ origination SG&A expense as a multiple of rent acquired was 1.4x for Q3 2021, which is in-line with its metric of 1.2x for Q2 2021. Importantly, this metric measures the company’s efficiency in acquiring incremental rental streams.

Tenant Base

As of Q3 2021, Radius Global Infrastructure’s top 20 tenants represented 87% of its annualized in-place rents. Also, in aggregate, the Radius tenant base comprises 62% wireless carriers and 38% tower companies.

During Q3 2021, the company increased its exposure to wireless carriers given that, in Q2 2021, Radius’ tenant base comprised 60% wireless carriers and 40% tower companies.

Geographic Exposure

At quarter-end, the company’s annualized in-place rents, by currency, were 43% Euros, 19% British Pounds, and 17% U.S. dollars. The remaining 22% of the company’s annualized in-place rents were derived from several other currencies. During Q3 2021, Radius increased its relative rental revenue exposure to Europe.

Tenant Leases

Overall, Radius Global Infrastructure’s ground leases have a weighted average remaining lease term of ~9 years. As of September 30, 2021, the company’s weighted average escalator was 3.2% year-over-year.

Asset Terms

The terms of Radius’ real property interests range from 30 years (i.e., Latin America) to 99 years (typical). These real property interests provide the company with the right to receive the future income from tenant lease rental payments.

Overall, as of Q3 2021, the average remaining term of the company’s real property interests vary by geography. Specifically: i) U.S. and Canada at 53.8 years, ii) Europe at 66.0 years, and iii) Latin America at 27.8 years.

Convertible Notes – Debt Raise – Q3 2021

In September 2021, Radius issued $264.5m of senior unsecured convertible debt with 2.5% interest which matures in September 2026. Concurrently, the company entered into capped call transactions ensuring that no equity dilution will occur until Radius’ share price exceeds $34.80 (~2x Radius’ latest closing price). As a result of the issuance, Radius received net proceeds of $222m.

Radius will invest the net proceeds from this debt financing into acquiring new rental streams from its pipeline of origination opportunities. To this end, the company is now targeting the deployment of at least $400m of acquisition capital expenditures during 2022.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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