VRAI - Cell Tower REITs: Living On The Edge

• Cell Tower REITs have been one of the primary 'growth engines' of the REIT sector, but are poised to snap their six-year streak of outperformance over the REIT Index this year.
• The recent slump began around mid-year as several risk factors emerged including potential competition from Low-Earth-Orbit satellite networks and delays in 5G deployment over airline interference concerns.
• American Tower’s $10B acquisition of data center REIT CoreSite was also met by a lukewarm response, but we like the overall strategy to establish dominant positioning in emerging "Edge" networks.
• The near- and medium-term outlook for cell tower REITs remains quite promising, and macro towers should continue to be the primary "hub" of communications networks throughout this decade, at least.
• Some caution is warranted, however, given the potential longer-term technological uncertainty, the sector's premium valuations, and tower REITs' massive weight in the market-cap-weighted indexes.

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