SBA COMMUNICATIONS CORPORATION 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 inthe United States and its territories. In addition, we own and operate towers inSouth America ,Central America ,Canada , andSouth Africa . Our primary business line is our site leasing business, which contributed 98.6% of our total segment operating profit for the nine months endedSeptember 30, 2020 . 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 ofSeptember 30, 2020 , we owned 32,724 towers, a substantial portion of which have been built 25
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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 inthe United States ,South America ,Central America ,Canada , andSouth Africa . As ofSeptember 30, 2020 , (1) noU.S. state or territory accounted for more than 10% of our total tower portfolio by tower count, and (2) noU.S. state or territory accounted for more than 10% of our total revenues for the nine months endedSeptember 30, 2020 . In addition, as ofSeptember 30, 2020 , approximately 30% of our total towers are located inBrazil and less than 4% of our total towers are located in any of our other international markets (each country is considered a market). We derive site leasing revenues primarily from wireless service provider tenants, including T-Mobile, AT&T,Verizon Wireless , Oi S.A., Telefonica, Claro, 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. Inthe United States andCanada , our tenant leases are generally for an initial term of five years to 10 years with multiple five year 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 inSouth Africa and our Central and South American markets typically have an initial term of 10 years with multiple five year renewal periods. InCentral America , we have similar rent escalators to that of leases inthe United States andCanada while our leases inSouth America andSouth Africa escalate in accordance with a standard cost of living index. Site leases inSouth 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.
Cost of site leasing revenue primarily consists of:
?Cash and non-cash rental expense on ground leases and other underlying property interests;
?Property taxes;
?Site maintenance and monitoring costs (exclusive of employee related costs);
?Utilities; ?Property insurance; and
?Lease initial direct cost amortization.
Inthe 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 andSouth Africa , adjust in accordance with a standard cost of living index. As ofSeptember 30, 2020 , 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. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of property taxes varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing. In our Central American markets andEcuador , significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated inU.S. dollars. Specifically, most of our ground leases and other property interests, tenant leases, and tower-related expenses are paid inU.S. dollars. In our Central American markets, our local currency obligations are principally limited to (1) permitting and other local fees, (2) utilities, and (3) taxes. InBrazil ,Canada ,Chile , andSouth 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. InColombia ,Argentina , andPeru , 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 andU.S. dollars. 26
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As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements included in this quarterly report.
For the three months
ended For the nine months ended
September 30, September 30,
Segment operating profit as a
percentage of total 2020 2019 2020 2019
Domestic site leasing 81.4% 80.9% 81.2% 80.8%
International site leasing 16.8% 16.9% 17.4% 16.7%
Total site leasing 98.2% 97.8% 98.6% 97.5%
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. During the remainder of 2020, we expect organic site leasing
revenue in both our domestic and international segments to increase over 2019
levels due in part to wireless carriers deploying unused spectrum. We believe
our site leasing business is characterized by stable and long-term recurring
revenues, predictable operating costs and minimal non-discretionary capital
expenditures. Due to the relatively young age and mix of our tower portfolio, we
expect future expenditures required to maintain these towers to be minimal.
Consequently, we expect to grow our cash flows by (1) adding tenants to our
towers at minimal incremental costs by using existing tower capacity or
requiring wireless service providers to bear all or a portion of the cost of
tower modifications and (2) executing monetary amendments as wireless service
providers add or upgrade their equipment. Furthermore, because our towers are
strategically positioned, we have historically experienced low tenant lease
terminations as a percentage of revenue other than in connection with customer
consolidation or cessations of a specific technology.
Our site development business, which is conducted inthe United States only, is complementary to our site leasing business and provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our tower locations. Site development revenues are earned primarily from providing a full range of end to end services to wireless service providers or companies providing development or project management services to wireless service providers. Our services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas on existing infrastructure; (4) support in leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction; (7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services at our towers and at towers owned by others on a local basis, through regional, market, and project offices. The market offices are responsible for all site development operations.
For information regarding our operating segments, see Note 14 of our condensed notes to consolidated financial statements in this quarterly report.
Customers
We lease tower space to and perform site development services for all of the largeU.S. wireless service providers. In both our site leasing and site development businesses, we work with large national providers and smaller regional, local, or private operators. Internationally, we lease tower space to all major service providers inSouth America ,Central America ,Canada , andSouth Africa . OnApril 1, 2020 , T-Mobile finalized a merger with Sprint and now operates as T-Mobile. For the three months endedSeptember 30, 2020 , T-Mobile represented 40.2% of our total domestic site leasing revenue and 67.6% of our site development revenue. For the nine months endedSeptember 30, 2020 , T-Mobile represented 40.6% of our total domestic site leasing revenue and 59.7% of our site development revenue. 27
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Capital Allocation Strategy
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 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. Key elements of our capital allocation strategy include: Portfolio Growth. We intend to continue to grow our asset portfolio, domestically and internationally, primarily through tower acquisitions and the construction of new towers that meet our internal return on invested capital criteria. Stock Repurchase Program. We currently utilize stock repurchases as part of our capital allocation policy when we believe our share price is below its intrinsic value. We believe that share repurchases, when purchased at the right price, will facilitate our goal of increasing our Adjusted Funds From Operations per share. Dividend. In 2019, we added dividends as an additional component of our strategy of returning value to shareholders. We do not expect our dividend to require any changes in our leverage and, we believe, it will allow us to continue to focus on building and buying quality assets and opportunistically buying back our stock. 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
During the nine months endedSeptember 30, 2020 , we 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, and methods taken to contain or treat the outbreak of COVID-19. While the full impact of COVID-19 is not yet known, we will continue to monitor this recent outbreak and the potential effects on our business. For more information regarding COVID-19, refer to Item 1A. Risk Factors.
Critical Accounting Policies and Estimates
We have identified the policies and significant estimation processes listed in the Annual Report on Form 10-K as critical to our business operations and the understanding of our results of operations. The listing is not intended to be a comprehensive list. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted inthe United States , with no need for management's judgment in their application. 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. 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 endedDecember 31, 2019 . 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. RESULTS OF OPERATIONS This report presents our financial results and other financial metrics 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 the remeasurement of our intercompany loans. 28
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Three Months Ended
Revenues and Segment Operating Profit:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
Revenues (in thousands)
Domestic site leasing $ 390,961 $ 374,705 $ - $ 16,256 4.3%
International site leasing 95,804 93,867 (20,147) 22,084 23.5%
Site development 36,175 38,975 - (2,800) (7.2%)
Total $ 522,940 $ 507,547 $ (20,147) $ 35,540 7.0%
Cost of Revenues
Domestic site leasing $ 64,228 $ 63,836 $ - $ 392 0.6%
International site leasing 28,494 29,157 (6,659) 5,996 20.6%
Site development 28,797 30,516 - (1,719) (5.6%)
Total $ 121,519 $ 123,509 $ (6,659) $ 4,669 3.8%
Operating Profit
Domestic site leasing $ 326,733 $ 310,869 $ - $ 15,864 5.1%
International site leasing 67,310 64,710 (13,488) 16,088 24.9%
Site development 7,378 8,459 - (1,081) (12.8%) Revenues Domestic site leasing revenues increased$16.3 million for the three months endedSeptember 30, 2020 , as compared to the prior year, primarily due to (1) revenues from 120 towers acquired and 21 towers built sinceJuly 1, 2019 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$1.9 million for the three months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, international site leasing revenues increased$22.1 million . These changes were primarily due to (1) revenues from 2,316 towers acquired (including 1,313 and 911 towers acquired inBrazil andSouth Africa , respectively) and 446 towers built sinceJuly 1, 2019 and (2) organic site leasing growth from new leases, amendments, and contractual escalators. Site leasing revenue inBrazil represented 10.8% 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 decreased
Operating Profit
Domestic site leasing segment operating profit increased$15.9 million for the three months endedSeptember 30, 2020 , as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built sinceJuly 1, 2019 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$2.6 million for the three months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased$16.1 million . These changes were primarily due to additional profit generated by (1) towers acquired and built sinceJuly 1, 2019 and organic site 29
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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 decreased$1.1 million for the three months endedSeptember 30, 2020 , as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.
Selling, General, and Administrative Expenses:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 25,466 $ 21,840 $ - $ 3,626 16.6%
International site leasing 8,747 8,626 (1,174) 1,295 15.0%
Total site leasing $ 34,213 $ 30,466 $ (1,174) $ 4,921 16.2%
Site development 4,518 4,183 - 335 8.0%
Other 9,421 7,623 - 1,798 23.6%
Total $ 48,152 $ 42,272 $ (1,174) $ 7,054 16.7%
Selling, general, and administrative expenses increased $5.9 million for the
three months ended September 30, 2020 , as compared to the prior year. On a
constant currency basis, selling, general, and administrative expenses increased
$7.1 million . These changes were primarily as a result of increases in noncash
compensation, personnel and other support related costs due in part to our
continued international expansion and charitable contributions related to
COVID-19 relief, and back-office operating expenses, partially offset by a
decrease in travel related expenses.
Acquisition and New Business Initiatives Related Adjustments and Expenses:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 2,458 $ 2,717 $ - $ (259) (9.5%)
International site leasing 1,666 1,975 (322) 13 0.7%
Total $ 4,124 $ 4,692 $ (322) $ (246) (5.2%)
Asset Impairment and Decommission Costs:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 6,129 $ 6,027 $ - $ 102 1.7%
International site leasing 2,377 2,213 (522) 686 31.0%
Total $ 8,506 $ 8,240 $ (522) $ 788 9.6%
Asset impairment and decommission costs increased $0.3 million for the three
months ended September 30, 2020 , as compared to the prior year. On a constant
currency basis, asset impairment and decommission costs increased $0.8 million .
These changes were primarily as a result of a $1.4 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, partially offset by a $1.1 million decrease in the
impairment charge related to sites decommissioned in the third quarter of 2020
compared to the prior year period.
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Depreciation, Accretion, and Amortization Expense:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 135,350 $ 132,650 $ - $ 2,700 2.0%
International site leasing 42,851 40,208 (8,891) 11,534 28.7%
Total site leasing $ 178,201 $ 172,858 $ (8,891) $ 14,234 8.2%
Site development 578 660 - (82) (12.4%) Other 1,523 1,469 - 54 3.7% Total$ 180,302 $ 174,987 $ (8,891) $ 14,206 8.1% Depreciation, accretion, and amortization expense increased$5.3 million for the three months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased$14.2 million . These changes were primarily due to an increase in the number of towers we acquired and built sinceJuly 1, 2019 , partially offset by the impact of assets that became fully depreciated since the prior year period. Operating Income (Expense): For the three months ended Constant September 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing$ 157,330 $ 147,635 $ - $ 9,695 6.6% International site leasing 11,669 11,688 (2,579) 2,560 21.9% Total site leasing$ 168,999 $ 159,323 $ (2,579) $ 12,255 7.7% Site development 2,282 3,616
- (1,334) (36.9%) Other (10,944) (9,092) - (1,852) 20.4% Total$ 160,337 $ 153,847 $ (2,579) $ 9,069 5.9%
Domestic site leasing operating income increased
International site leasing operating income did not change significantly on an actual basis for the three months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, international site leasing operating income increased$2.6 million . These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, and asset impairment and decommission costs. Site development operating income decreased$1.3 million for the three months endedSeptember 30, 2020 , as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T-Mobile and Sprint and an increase in selling, general, and administrative expenses. ? 31
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Other Income (Expense):
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Interest income $ 756 $ 1,311 $ (154) $ (401) (30.6%)
Interest expense (89,791) (96,567) 1 6,775 (7.0%)
Non-cash interest expense (8,323) (662) - (7,661) 1,157.3%
Amortization of deferred
financing fees (4,883) (5,157) - 274 (5.3%)
Loss from extinguishment of
debt, net (2,599) (457) - (2,142) 468.7%
Other expense, net (42,262) (33,551) (7,005) (1,706) 113.4%
Total $ (147,102) $ (135,083) $ (7,158) $ (4,861) 4.7%
Interest expense decreased $6.8 million for the three months ended September 30,
2020 , as compared to the prior year primarily due to a lower weighted average
interest rate due in part to the new interest rate swap entered into during the
third quarter of 2020, partially offset by a higher average principal amount of
cash-interest bearing debt outstanding.
Non-cash interest expense increased
Loss from extinguishment of debt was
Other expense, net includes a$38.6 million loss on the remeasurement ofU.S. dollar denominated intercompany loans with foreign subsidiaries for the three months endedSeptember 30, 2020 , while the prior year period included a$31.9 million loss.
Benefit (Provision) for Income Taxes:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Benefit (provision) for
income taxes $ 9,441 $ 3,002 $ 2,751 $ 3,688 (46.4%)
Benefit for income taxes increased $6.4 million for the three months ended
September 30, 2020 , as compared to the prior year. On a constant currency basis,
benefit for income taxes increased $3.7 million primarily due to a decrease in
domestic and foreign withholding taxes, partially offset by an increase in
foreign income taxes.
Net Income:
For the three months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Net income $ 22,676 $ 21,766 $ (6,986) $ 7,896 18.0%
Net income increased $0.9 million for the three months ended September 30, 2020 ,
as compared to the prior year. On a constant currency basis, net income
increased $7.9 million . This change was primarily due to increases in operating
income and benefit for income taxes and a decrease in cash interest expense
related to the interest rate swaps, partially offset by increases in non-cash
interest expense related to the interest rate swap and loss from extinguishment
of debt.
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Nine Months Ended
Revenues and Segment Operating Profit:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
Revenues (in thousands)
Domestic site leasing
- $ 58,600 5.3%
International site leasing 296,201 273,036 (53,616) 76,781 28.1%
Site development 85,708 121,229 - (35,521) (29.3%)
Total $ 1,547,231 $ 1,500,987 $ (53,616) $ 99,860 6.7%
Cost of Revenues
Domestic site leasing $ 192,226 $ 194,525 $ - $ (2,299) (1.2%)
International site leasing 87,894 84,642 (17,461) 20,713 24.5%
Site development 68,417 92,606 - (24,189) (26.1%)
Total $ 348,537 $ 371,773 $ (17,461) $ (5,775) (1.6%)
Operating Profit
Domestic site leasing $ 973,096 $ 912,197 $ - $ 60,899 6.7%
International site leasing 208,307 188,394 (36,155) 56,068 29.8%
Site development 17,291 28,623 - (11,332) (39.6%)
Revenues
Domestic site leasing revenues increased $58.6 million for the nine months ended
September 30, 2020 , as compared to the prior year, primarily due to (1) revenues
from 230 towers acquired and 35 towers built since January 1, 2019 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 $23.2 million for the nine months
ended September 30, 2020 , as compared to the prior year. On a constant currency
basis, international site leasing revenues increased $76.8 million . These
changes were primarily due to (1) revenues from 2,342 towers acquired and 591
towers built since January 1, 2019 and (2) organic site leasing growth from new
leases, amendments, and contractual escalators. Site leasing revenue in Brazil
represented 11.5% 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 decreased
Operating Profit
Domestic site leasing segment operating profit increased$60.9 million for the nine months endedSeptember 30, 2020 , as compared to the prior year, primarily due to additional profit generated by (1) towers acquired and built sinceJanuary 1, 2019 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$19.9 million for the nine months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased$56.1 million . These changes were primarily due to additional profit generated by (1) towers acquired and built sinceJanuary 1, 2019 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. 33
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Site development segment operating profit decreased$11.3 million for the nine months endedSeptember 30, 2020 , as compared to the prior year, as a result of decreased carrier activity driven primarily by T-Mobile and Sprint.
Selling, General, and Administrative Expenses:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 78,021 $ 77,926 $ - $ 95 0.1%
International site leasing 25,713 22,624 (3,064) 6,153 27.2%
Total site leasing $ 103,734 $ 100,550 $ (3,064) $ 6,248 6.2%
Site development 13,468 16,774 - (3,306) (19.7%) Other 29,654 31,431 - (1,777) (5.7%) Total$ 146,856 $ 148,755 $ (3,064) $ 1,165 0.8% Selling, general, and administrative expenses decreased$1.9 million for the nine months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses increased$1.2 million . These changes were primarily as a result of increases in personnel and other support related costs due in part to our continued international expansion and charitable contributions related to COVID-19 relief, partially offset by decreases in noncash compensation due to the acceleration of unrecognized stock compensation expense in the prior year related to the adoption of the retirement plan, travel related expenses, and back-office operating expenses.
Acquisition and New Business Initiatives Related Adjustments and Expenses:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 8,059 $ 4,698 $ - $ 3,361 71.5%
International site leasing 4,498 4,971 (695) 222 4.5%
Total $ 12,557 $ 9,669 $ (695) $ 3,583 37.1%
Acquisition and new business initiatives related adjustments and expenses
increased $2.9 million for the nine months ended September 30, 2020 , as compared
to the prior year. On a constant currency basis, acquisition and new business
initiatives related adjustments and expenses increased $3.6 million . These
changes were primarily as a result of incremental costs incurred in support of
new business initiatives.
Asset Impairment and Decommission Costs:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 22,297 $ 18,476 $ - $ 3,821 20.7%
International site leasing 6,806 5,155 (901) 2,552 49.5%
Total $ 29,103 $ 23,631 $ (901) $ 6,373 27.0%
Asset impairment and decommission costs increased $5.5 million for the nine
months ended September 30, 2020 , as compared to the prior year. On a constant
currency basis, asset impairment and decommission costs increased $6.4 million .
These changes were primarily as a result of a $10.2 million increase in
impairment charges resulting from our regular analysis of whether the
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future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers, partially offset by a$4.8 million decrease in the impairment charge related to sites decommissioned in the nine months endedSeptember 30, 2020 compared to the prior year period.
Depreciation, Accretion, and Amortization Expenses:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Domestic site leasing $ 403,725 $ 394,308 $ - $ 9,417 2.4%
International site leasing 131,474 117,197 (23,803) 38,080 32.5%
Total site leasing $ 535,199 $ 511,505 $ (23,803) $ 47,497 9.3%
Site development 1,791 1,900 - (109) (5.7%) Other 4,597 4,185 - 412 9.8% Total$ 541,587 $ 517,590 $ (23,803) $ 47,800 9.2% Depreciation, accretion, and amortization expense increased$24.0 million for the nine months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased$47.8 million . These changes were primarily due to an increase in the number of towers we acquired and built sinceJanuary 1, 2019 , partially offset by the impact of assets that became fully depreciated since the prior year period. Operating Income (Expense): For the nine months ended Constant September 30, Foreign Constant Currency 2020 2019 Currency Impact Currency Change % Change (in thousands) Domestic site leasing$ 460,994 $ 416,789 $ - $ 44,205 10.6% International site leasing 39,816 38,447 (7,692) 9,061 23.6% Total site leasing$ 500,810 $ 455,236 $ (7,692) $ 53,266 11.7% Site development 2,032 9,949
- (7,917) (79.6%) Other (34,251) (35,616) - 1,365 (3.8%) Total$ 468,591 $ 429,569 $ (7,692) $ 46,714 10.9% Domestic site leasing operating income increased$44.2 million for the nine months endedSeptember 30, 2020 , as compared to the prior year, primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, asset impairment and decommission costs, acquisition and new business initiatives related adjustments and expenses, and selling, general, and administrative expenses. International site leasing operating income increased$1.4 million for the nine months endedSeptember 30, 2020 , as compared to the prior year. On a constant currency basis, international site leasing operating income increased$9.1 million . These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expense, selling, general, and administrative expenses, and asset impairment and decommission costs. Site development operating income decreased$7.9 million for the nine months endedSeptember 30, 2020 , as compared to the prior year, primarily due to lower segment operating profit driven by less activity from T-Mobile and Sprint, partially offset by a decrease in selling, general, and administrative expenses. ? 35
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Other Income (Expense):
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Interest income $ 2,340 $ 4,692 $ (374) $ (1,978) (42.2%)
Interest expense (281,329) (292,681) (13) 11,365 (3.9%)
Non-cash interest expense (13,066) (1,954) - (11,112) 568.7%
Amortization of deferred
financing fees (15,211) (15,333) - 122 (0.8%)
Loss from extinguishment of
debt, net (19,463) (457) - (19,006) 4,158.9%
Other expense, net (300,144) (21,296) (276,008) (2,840) (78.9%)
Total $ (626,873) $ (327,029) $ (276,395) $ (23,449) 7.8%
Interest income decreased $2.4 million for the nine months ended September 30,
2020 , as compared to the prior year. On a constant currency basis, interest
income decreased $2.0 million . These changes were primarily due to a lower rate
of interest earned on both domestic and international investments.
Interest expense decreased $11.4 million for the nine months ended September 30,
2020 , as compared to the prior year. These changes were primarily due to a lower
weighted average interest rate due in part to the new 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
Loss from extinguishment of debt was$19.5 million for the nine months endedSeptember 30, 2020 due to the payment of a$9.1 million call premium and the write-off of$7.7 million of the original issuance discount and financing fees related to the redemption of the 2014 Senior Notes inFebruary 2020 , as well as the write-off of$2.6 million of unamortized financing fees related to the repayment of the 2015-1C and 2016-1CTower Securities inJuly 2020 . Other expense, net includes a$299.9 million loss on the remeasurement ofU.S. dollar denominated intercompany loans with foreign subsidiaries for the nine months endedSeptember 30, 2020 , while the prior year period included a$24.8 million loss.
Benefit (Provision) for Income Taxes:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Benefit (provision) for
income taxes $ 76,143 $ (22,813) $ 92,853 $ 6,103 (19.5%)
Benefit for income taxes increased $99.0 million for the nine months ended
September 30, 2020 , as compared to the prior year. On a constant currency basis,
benefit for income taxes increased $6.1 million . These changes were primarily
due to a decrease in domestic income taxes and foreign withholding taxes,
partially offset by an increase in foreign income taxes.
Net (Loss) Income:
For the nine months ended Constant
September 30, Foreign Constant Currency
2020 2019 Currency Impact Currency Change % Change
(in thousands)
Net (loss) income $ (82,139) $ 79,727 $ (191,234) $ 29,368 30.0%
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Net loss was$82.1 million for the nine months endedSeptember 30, 2020 , as compared to net income of$79.7 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 theU.S. dollar denominated intercompany loans with foreign subsidiaries, a loss from extinguishment of debt in the current year period, and an increase in non-cash interest expense, partially offset by increases in operating income, interest expense, and benefit for income taxes. NON-GAAP FINANCIAL MEASURES This report contains information regarding Adjusted EBITDA, a non-GAAP measure. 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. 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 the remeasurement of our intercompany loans.
Adjusted EBITDA
We define Adjusted EBITDA as net income excluding the impact of non-cash
straight-line leasing revenue, non-cash straight-line ground lease expense,
non-cash compensation, net loss from extinguishment of debt, other income and
expenses, acquisition and new business initiatives related adjustments and
expenses, asset impairment and decommission costs, interest income, interest
expenses, depreciation, accretion, and amortization, and provision for or
benefit from taxes.
We believe that Adjusted EBITDA is useful to investors or other interested
parties in evaluating our financial performance. 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
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, 2017 Senior
Notes, and 2020 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 Constant
September 30, Foreign Constant Currency
Currency Currency
2020 2019 Impact Change % Change
(in thousands)
Net income $ 22,676 $ 21,766 $ (6,986) $ 7,896 18.0%
Non-cash straight-line
leasing revenue (635) (3,807) (57) 3,229 (84.8%)
Non-cash straight-line
ground lease expense 3,375 4,522 (22) (1,125) (24.9%)
Non-cash compensation 17,057 12,732 (279) 4,604 36.2%
Loss from extinguishment of
debt, net 2,599 457 - 2,142 468.7%
Other expense, net 42,262 33,551 7,005 1,706 113.4%
Acquisition and new business
initiatives
related adjustments and
expenses 4,124 4,692 (322) (246) (5.2%)
Asset impairment and
decommission costs 8,506 8,240 (522) 788 9.6%
Interest income (756) (1,311) 154 401 (30.6%)
Total interest expense (1) 102,997 102,386 (1) 612 0.6%
Depreciation, accretion, and
amortization 180,302 174,987 (8,891) 14,206 8.1%
Benefit for income taxes (2) (9,206) (2,788) (2,752) (3,666) (44.9%)
Adjusted EBITDA $ 373,301 $ 355,427 $ (12,673) $ 30,547 8.6%
?
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For the nine months ended Constant
September 30, Foreign Constant Currency
Currency
2020 2019 Currency Impact Change % Change
(in thousands)
Net (loss) income $ (82,139) $ 79,727 $ (191,234) $ 29,368 30.0%
Non-cash straight-line
leasing revenue (3,323) (9,344) (81) 6,102 (65.3%)
Non-cash straight-line
ground lease expense 10,902 15,880 (44) (4,934) (31.1%)
Non-cash compensation 51,915 60,633 (939) (7,779) (12.8%)
Loss from extinguishment of
debt, net 19,463 457 - 19,006 4,158.9%
Other expense, net 300,144 21,296 276,008 2,840 78.9%
Acquisition and new business
initiatives
related adjustments and
expenses 12,557 9,669 (695) 3,583 37.1%
Asset impairment and
decommission costs 29,103 23,631 (901) 6,373 27.0%
Interest income (2,340) (4,692) 374 1,978 (42.2%)
Total interest expense (1) 309,606 309,968 13 (375) (0.1%)
Depreciation, accretion, and
amortization 541,587 517,590 (23,803) 47,800 9.2%
(Benefit) provision for
income taxes (2) (75,461) 23,423 (92,855) (6,029) (18.9%)
Adjusted EBITDA $ 1,112,014 $ 1,048,238 $ (34,157) $ 97,933 9.3%
(1)Total interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.
(2)(Benefit) provision for taxes includes$235 and$214 of franchise taxes for the three months endedSeptember 30, 2020 and 2019, respectively, and$682 and$610 of franchise taxes for the nine months endedSeptember 30, 2020 and 2019, respectively, reflected in selling, general, and administrative expenses on the Consolidated Statements of Operations. Adjusted EBITDA increased$17.9 million for the three months endedSeptember 30, 2020 , as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased$30.5 million . These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses. Adjusted EBITDA increased$63.8 million for the nine months endedSeptember 30, 2020 , as compared to the prior year period. On a constant currency basis, Adjusted EBITDA increased$97.9 million . These changes were primarily due to an increase in site leasing segment operating profit, partially offset by a decrease in site development segment operating profit and an increase in cash selling, general, and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
SBAC is a holding company with no business operations of its own. SBAC's only significant asset is 100% of the outstanding capital stock ofSBA Telecommunications, LLC ("Telecommunications"), which is also a holding company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets. We conduct all of our business operations through Telecommunications' subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries. ? 38
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A summary of our cash flows is as follows:
For the nine months ended
September 30, 2020 September 30, 2019
(in thousands)
Cash provided by operating activities $ 882,908 $ 704,984
Cash used in investing activities (353,378) (415,066)
Cash used in financing activities (314,250) (307,581)
Change in cash, cash equivalents, and
restricted cash 215,280 (17,663)
Effect of exchange rate changes on cash, cash
equiv., and restricted cash (20,427) (1,957)
Cash, cash equivalents, and restricted cash,
beginning of period 141,120 178,300
Cash, cash equivalents, and restricted cash,
end of period $ 335,973 $ 158,680
Operating Activities
Cash provided by operating activities was $882.9 million for the nine months
ended September 30, 2020 as compared to $705.0 million for the nine months ended
September 30, 2019 . The increase was primarily due to increases in site leasing
segment operating profit and cash inflows associated with working capital
changes primarily from timing of customer payments, partially offset by a
decrease in site development segment operating profit and an increase in cash
selling, general, and administrative expenses.
Investing Activities
A detail of our investing activities is as follows:
For the nine months ended
September 30,
2020 2019
(in thousands)
Acquisitions of towers and related intangible assets
(78,580) (59,116)
Construction and related costs on new builds (40,126)
(40,191)
Augmentation and tower upgrades (29,712) (46,571) Tower maintenance (22,162) (21,480) General corporate (3,371) (3,139) Net purchases of investments (53,267) (13,358) Other investing activities (4,841) (6,626) Net cash used in investing activities$ (353,378) $
(415,066)
(1)Excludes$5.9 million and$13.1 million spent to extend ground lease terms for the nine months endedSeptember 30, 2020 and 2019, respectively. Includes amounts paid related to the acquisition of data centers for the nine months endedSeptember 30, 2020 and 2019. Subsequent toSeptember 30, 2020 , we acquired 54 towers and related assets for$14.6 million in cash. In addition, we agreed to purchase 132 additional sites for$85.0 million . For 2020, we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of$32.0 million to$38.0 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$356.0 million to$366.0 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. 39
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Financing Activities
A detail of our financing activities is as follows:
For the nine months ended
September 30, 2020 September 30, 2019
(in thousands)
Net borrowings (repayments) under Revolving
Credit Facility (1) $ (490,000) $ (325,000)
Proceeds from issuance of Senior Notes, net of fees (1) 1,479,522 - Repayment of Senior Notes (1) (759,143) - Proceeds from issuance ofTower Securities , net of fees (1) 1,336,003
1,153,036
Repayment ofTower Securities (1) (1,200,000)
(920,000)
Termination of interest rate swap (176,200) - Proceeds from employee stock purchase/stock option plans, net of taxes 50,283
112,909
Repurchase and retirement of common stock (2) (378,988)
(267,534)
Payment of dividends on common stock (156,199)
(41,873)
Other financing activities (19,528)
(19,119)
Net cash used in financing activities $ (314,250) $
(307,581)
(1)For additional information regarding our debt instruments and financings, refer to the Debt Instruments and Debt Service Requirements below.
(2)During the nine months endedSeptember 30, 2020 , we repurchased 1.4 million shares of our Class A common stock for$375.6 million , at an average price per share of$267.57 . Subsequent toSeptember 30, 2020 , we repurchased 0.4 million shares of our Class A common stock for$124.4 million at a weighted average price per share of$299.54 . Shares repurchased were retired. OnNovember 2, 2020 , our Board of Directors authorized a new$1.0 billion stock repurchase plan, replacing the prior plan authorized onJuly 29, 2019 which had a remaining authorization of$124.3 million . This new plan authorizes the purchase, from time to time, of up to$1.0 billion of our outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management's discretion based on market and business conditions, applicable legal requirements and other factors. Shares repurchased will be retired. The new plan has no time deadline and will continue until otherwise modified or terminated by our Board of Directors at any time in its sole discretion. As of the date of this filing, we had the full$1.0 billion of authorization remaining under the new plan. Dividend For the nine months endedSeptember 30, 2020 , we paid the following cash dividends: Payable to Shareholders of Record At the Close Cash Paid Aggregate Amount Date Declared of Business on Per Share Paid Date Paid February 20, 2020 March 10, 2020$0.465 $52.2 million March 26, 2020 May 5, 2020 May 28, 2020$0.465 $52.0 million June 18, 2020 August 3, 2020 August 25, 2020$0.465 $52.0 million September 21, 2020
Subsequent to
Payable to Shareholders Cash to
of Record At the Close be Paid
Date Declared of Business on Per Share Date to be Paid
November 2, 2020 November 19, 2020 $0.465 December 17, 2020
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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. The actual amount, timing and frequency of future dividends, will be at the sole discretion of our Board of Directors and will be declared based upon various factors, many of which are beyond our control.
Registration Statements
We have on file with 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. During the nine months endedSeptember 30, 2020 , we did not issue any shares of Class A common stock under this registration statement. As ofSeptember 30, 2020 , we had approximately 1.2 million shares of Class A common stock remaining under this registration statement. OnMarch 5, 2018 , we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR. This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules governing automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of the amount and type of securities each time we issue securities under this registration statement. No securities were issued under this registration statement through the date of this filing. OnAugust 6, 2020 , we filed a registration statement on Form S-8 with theSecurities and Exchange Commission registering 3.4 million shares of our Class A common stock, consisting of 3.0 million shares of Common Stock issuable under the 2020 Performance and Equity Incentive Plan (the "2020 Plan") and 400,000 shares of Common Stock subject to awards granted under the 2010 Plan that may become available for issuance or reissuance, as applicable, under the 2020 Plan if such awards are forfeited or are settled in cash or otherwise expire or terminate without the delivery of the shares.
Debt Instruments and Debt Service Requirements
Revolving Credit Facility under the Senior Credit Agreement
The Revolving Credit Facility consists of a revolving loan under which up to$1.25 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, atSBA Senior Finance II's election, at either (1) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 175.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 75.0 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 0.20% and 0.25% per annum on the amount of unused commitment. If not earlier terminated bySBA Senior Finance II the Revolving Credit Facility will terminate on, andSBA Senior Finance II will repay all amounts outstanding on or before,April 11, 2023 . The proceeds available under the Revolving Credit Facility may be used for general corporate purposes.SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. 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 endedSeptember 30, 2020 , no amounts were borrowed or repaid under the Revolving Credit Facility. During the nine months endedSeptember 30, 2020 , we borrowed$515.0 million and repaid$1.0 billion of the outstanding balance under the Revolving Credit Facility. As ofSeptember 30, 2020 , we had no amount outstanding under the$1.25 billion Revolving Credit Facility. In addition,SBA Senior Finance II was required to pay a commitment fee of 0.20% per annum on the amount of the unused commitment. As ofSeptember 30, 2020 ,SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.
As of the date of this filing, we had no amount outstanding under the Revolving Credit Facility.
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Term Loan under the Senior Credit Agreement
2018 Term Loan
OnApril 11, 2018 , we, through our wholly owned subsidiary,SBA Senior Finance II , obtained a new 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 onApril 11, 2025 . The 2018 Term Loan accrues interest, atSBA Senior Finance II's election at either the Base Rate plus 75 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 175 basis points (with a zero Eurodollar Rate floor). As ofSeptember 30, 2020 , the 2018 Term Loan was accruing interest at 1.900% 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
OnAugust 4, 2020 , we, through our wholly owned subsidiary,SBA Senior Finance II , terminated our existing$1.95 billion cash flow hedge on a portion of our 2018 Term Loan in exchange for a payment of$176.2 million . On the same date, we 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.
As ofSeptember 30, 2020 , we, through aNew York common law trust (the "Trust"), had issued and outstanding an aggregate of$5.1 billion ofSecured 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 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. For each calendar month,SBA Network Management, Inc. , an indirect subsidiary ("Network Management"), is entitled to receive a management fee equal to 4.5% of the Borrowers' operating revenues for the immediately preceding calendar month. The table below sets forth the material terms of our outstandingTower Securities : Anticipated Final Amount Repayment Maturity Security Issue Date Outstanding Interest Rate Date Date 2013-2C Tower Securities Apr. 18, 2013$575.0 3.722%
million 2023 2048
2014-2C Tower Securities Oct. 15, 2014 $620.0 3.869%
million 2024 2049
2017-1C Tower Securities Apr. 17, 2017 $760.0 3.168%
million 2022 2047
2018-1C Tower Securities Mar. 9, 2018 $640.0 3.448%
million 2023 2048
2019-1C Tower Securities Sep. 13, 2019 $1.165 2.836%
billion 2025 2050
2020-1C Tower Securities Jul. 14, 2020 $750.0 1.884%
million 2026 2050
2020-2C Tower Securities Jul. 14, 2020 $600.0 2.328% Jan. 11, Jul. 9,
million 2028 2052
As of
OnJuly 14, 2020 , we, through the Trust, issued$750.0 million of 1.884% Secured Tower Revenue Securities Series 2020-1C which have an anticipated repayment date ofJanuary 9, 2026 and a final maturity date ofJuly 11, 2050 (the "2020-1CTower Securities ") and$600.0 million of 2.328%Secured Tower Revenue Securities Series 2020-2C which have an anticipated repayment date ofJanuary 11, 2028 and a final maturity date ofJuly 9, 2052 (the "2020-2CTower Securities ") (collectively the "2020Tower Securities "). The aggregate$1.35 billion of 2020Tower Securities have a blended interest rate of 2.081% and a weighted average life through the anticipated repayment date of 6.4 years. Net proceeds from this offering were used to repay the entire aggregate principal amount of the 2015-1CTower Securities ($500.0 million ) and the 2016-1CTower Securities ($700.0 million ). The remaining net proceeds of the 2020Tower Securities were used for general corporate purposes. We have incurred deferred financing fees of$14.0 million in relation to this transaction which are being amortized through the anticipated repayment date of the 2020Tower Securities . 42
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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)$40.0 million of Secured Tower Revenue Securities Series 2017-1R (the "2017-1RTower Securities ") issued by the Trust with a fixed interest rate of 4.459% per annum, payable monthly, and with the same anticipated repayment date and final maturity date as the 2017-1CTower Securities , (2)$33.7 million of Secured Tower Revenue Securities Series 2018-1R (the "2018-1RTower 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 2018-1CTower Securities , (3)$61.4 million of Secured Tower Revenue Securities Series 2019-1R (the "2019-1RTower 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 2019-1CTower Securities , and (4)$71.1 million of Secured Tower Revenue Securities Series 2020-2R (the "2020-2RTower 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 2020-2CTower Securities . Principal and interest payments made on the 2017-1RTower Securities , 2018-1RTower Securities , 2019-1RTower Securities , and 2020-2RTower Securities eliminate in consolidation.
Senior Notes
The table below sets forth the material terms of our outstanding senior notes:
Amount Interest % of Par
Senior Notes Issue Date Outstanding Interest Rate Maturity Date Due Dates Value 2016 Senior Aug. 15, 2016$1.1 4.875% Sep. 1, 2024 Mar. 1 & 99.178% Notes billion Sep. 1 2017 Senior Oct. 13, 2017$750.0 4.000% Oct. 1, 2022 Apr. 1 & 100.000% Notes million Oct. 1 2020-1 Senior Feb. 4, 2020$1.0 3.875% Feb. 15, 2027 Feb. 15 & 100.000% Notes (1) billion Aug. 15 2020-2 Senior May 26, 2020$500.0 3.875% Feb. 15, 2027 Feb. 15 & 99.500% Notes (1) million Aug. 15 (1)OnFebruary 4, 2020 , we issued$1.0 billion of unsecured senior notes at par value (the "2020-1 Senior Notes"), and onMay 26, 2020 , we issued$500.0 million of additional unsecured senior notes under the same indenture at 99.500% of par value (the "2020-2 Senior Notes") (collectively, the "2020 Senior Notes"). Net proceeds from these offerings were used to redeem the entire$750.0 million outstanding principal amount of the 2014 Senior Notes, repay amounts outstanding under the Revolving Credit Facility, and for general corporate purposes. In addition, we paid a$9.1 million call premium and expensed$7.7 million for the write-off of the original issue discount and financing fees related to the redemption of the 2014 Senior Notes which are reflected in loss from extinguishment of debt on the Consolidated Statements of Operations. Interest on the 2020 Senior Notes beganAugust 15, 2020 . We incurred financing fees of$18.0 million in relation to this transaction, which are being amortized through the maturity date. The 2020 Senior Notes are subject to redemption in whole or in part on or afterFebruary 15, 2023 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior toFebruary 15, 2023 , we may, at our option, redeem up to 35% of the aggregate principal amount of the 2020 Senior Notes originally issued at a redemption price of 103.875% of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. We may redeem the 2020 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices:February 15, 2023 at 101.938%,February 15, 2024 at 100.969%, orFebruary 15, 2025 until maturity at 100.000%, of the principal amount of the 2020 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. The unsecured senior notes are subject to redemption in whole or in part at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. We may redeem each of the senior notes during the time periods and at the redemption prices set forth in the indentures.
Debt Service
As ofSeptember 30, 2020 , we believe that our cash on hand, capacity available under our Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months. 43
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The following table illustrates our estimate of our debt service requirement over the next twelve months based on the amounts outstanding as ofSeptember 30, 2020 and the interest rates accruing on those amounts on such date (in thousands): Revolving Credit Facility$ 2,500 2018 Term Loan (1) 68,065 2013-2C Tower Securities 21,585 2014-2C Tower Securities 24,185 2017-1C Tower Securities 24,318 2018-1C Tower Securities 22,270 2019-1C Tower Securities 33,409 2020-1C Tower Securities 14,368 2020-2C Tower Securities 14,159 2016 Senior Notes 53,625 2017 Senior Notes 30,000 2020 Senior Notes 58,125
Total debt service for the next 12 months
(1)Total debt service on the 2018 Term Loan includes the impact of the interest rate swap entered into onAugust 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.
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