DALLAS, Jan. 24,
2025 /CNW/ -- Pioneering transaction monetizes
properties with development potential, reduces operating expenses,
and provides revenue sharing
Key Takeaways:
- Unlocks value in company-owned properties originally
constructed for legacy network equipment
- AT&T realizes more than $850
million in upfront cash proceeds from the asset transfer of
74 properties located across the country
- Unique deal structure preserves the necessary infrastructure
requirements to keep the network running smoothly, plus
participation in future revenue generated from redevelopment
As part of its legacy network transformation, AT&T
Inc. (NYSE: T) completed a structured sale-leaseback of
underutilized central office facilities with private real estate
development firm Reign Capital.
The transaction, which closed on Jan.
8, includes the asset transfer of 74 properties, located
across the country, encompassing over 13 million square feet of
space. The transaction generates more than $850 million in upfront cash proceeds for
AT&T through a unique deal structure that enables future profit
sharing from redevelopment opportunities.
"The uniquely structured deal unlocks value in otherwise
stranded commercial real estate space," said Michael Ford, head of global real estate,
AT&T. "It's a creative solution providing both upfront and
long-term value through a revenue sharing model that fits with our
broader company and transformation initiatives."
Central offices were originally built to house and connect
large, bulky, and energy-intensive equipment for outdated copper
networks. As customers move from copper to fiber and wireless, a
smaller, more efficient equipment footprint is managing the
network. This technology evolution not only reduces power
consumption, benefitting the environment, but also lowers operating
costs and frees up valuable real estate for other uses.
Terms and Protections
This model not only monetizes real estate assets as AT&T
plans to exit the large majority of its legacy copper network
operations by end of year 2029, but it also aligns with the
company's strategic capital allocation priorities.
By leasing back only space that is needed for the network,
AT&T is streamlining its real estate footprint. AT&T will
make lease payments to Reign Capital for the duration of the lease
term and maintain exclusive operational control of space required
for access to communications infrastructure in each location.
This transaction impacts only a small portion of AT&T's
portfolio of central offices. It has no impact on jobs or changes
in the services we offer customers.
Redevelopment Value
The agreement includes provisions for financial participation in
redevelopment revenues, ensuring long-term benefits from future
property value increases. AT&T retains final redevelopment plan
approvals to ensure network infrastructure and operations remain
undisturbed.
The structure also serves as a template for potential future
transactions for some locations in AT&T's footprint and is just
one way the company intends to realize cost savings from legacy
transformation.
In 2021, AT&T successfully executed a similar but smaller
real estate transaction with Reign Capital, involving 13 properties
covering over 3 million square feet. That deal generated more than
$300 million in upfront cash with
initial redevelopment revenue generation projected to begin in
2025.
About AT&T
We help more than 100 million U.S. families, friends and
neighbors, plus nearly 2.5 million businesses, connect to greater
possibility. From the first phone call 140+ years ago to our 5G
wireless and multi-gig internet offerings today, we @ATT innovate
to improve lives. For more information about AT&T Inc.
(NYSE:T), please visit us at about.att.com. Investors can
learn more at investors.att.com.
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Intellectual Property.
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SOURCE AT&T
