On August 10th Cumulus Media (NASDAQ: CMLS) announced that it had agreed to sell all of the company’s 250 broadcast communications tower sites to Vertical Bridge for $213m. Simultaneously with the closing, which occurred on October 1st, Cumulus Media entered into a long-term lease agreement for the continued use of the towers.

The initial term of the lease between Cumulus Media and Vertical Bridge is 10 years. Additionally, 5 option periods for extensions of five 5 years each exist in the lease agreement. Cumulus Media will have annual lease payment obligations to Vertical Bridge of $13.2 million, including rental escalators.

In terms of valuation metrics, Vertical Bridge purchased the towers for 14.3x tower cash flow. On a per towers basis, Vertical Bridge paid $852k per tower, based on the 250 towers acquired.

Houlihan Lokey acted as financial advisor and Jones Day acted as legal advisor to Cumulus Media on the sale of its towers to Vertical Bridge. Also, it is worth noting that Colony Capital is the lead investor backing Vertical Bridge’s growth.

Vertical Bridge Issues $360.5m of Secured Tower Revenue Notes

On September 25, 2020, Vertical Bridge announced that it had completed its second private asset-backed securitization (ABS) of 2020 with the issuance of $360.5m of Secured Tower Revenue Notes (the Notes). Proceeds from the transaction will be used to refinance Vertical Bridge’s October 2016 securitization and fund the acquisition of Cumulus Media’s 250 broadcast tower portfolio.

Overall, the Notes are collateralized by 636 broadcast tower sites. These sites span 47 states, including 381 sites acquired from iHeartMedia in connection with a sale-leaseback transaction in 2015. Additionally, the portfolio includes the 250 sites which Vertical Bridge agreed to acquire from and lease back to Cumulus Media.

Additionally, in June, Vertical Bridge issued $534m of Secured Tower Revenue Notes. This was the first securitization of a non-traditional asset following the ABS market’s shutdown due to the COVID-19 pandemic. Since 2016, the company has completed six securitizations and issued more than $1.7 billion of secured tower revenue notes.

Vertical Bridge is the fourth largest owner of towers in the United States. The company has 4k+ towers, giving it a market share of ~2.6% of the total towers in the U.S.

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