AT&T has closed a sale-leaseback of 74 US properties with Reign Capital, which will generate the telecommunications giant more than $850 million in cash. Also, the move will allow AT&T to explore redevelopment opportunities and allows revenue sharing on the assets.
According to AT&T, the 13 million square feet of properties only represents a small part of the company's central office portfolio. The deal will not negatively affect service or jobs and noted it is "leasing back space that's needed for the network." This will help AT&T cut operating expenses, trim power consumption, and turn away from copper networks, and allows it to earn money from the sold properties in the future.
"The agreement includes provisions for financial participation in redevelopment revenues, ensuring long-term benefits from future property value increases," the Dallas-based firm said in a statement.
"AT&T retains final redevelopment plan approvals to ensure network infrastructure and operations remain undisturbed."
The deal, as a part of its plan to exit most of its legacy copper network operations by 2029, could serve as a template for the company in the future again, according to AT&T.
“The uniquely structured deal unlocks value in otherwise stranded commercial real estate space,” Michael Ford, head of global real estate for AT&T, said.
“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.”
This isn't the first time AT&T has completed a sale-leaseback with Reign. The company received $300 million for 13 assets, spanning three million square feet. Initial redevelopment revenue from those properties is expected to happen this year, according to AT&T.
The terms for the 74 properties are unclear, but the firm said it will make payments to Reign for the remainder of the lease duration.