Uniti seeks to diversify tenant base in order to boost credit ratings

By Devika Patel

Knoxville, Tenn., Jan. 10 – Uniti Group Inc. hopes to reach 50% diversification from its current position with low-rated Windstream Holdings, Inc. as its main tenant in order to achieve higher ratings on its debt from the credit agencies.

“We have conversations [with the ratings agencies] routinely,” executive vice president, chief financial officer and treasurer Mark A. Wallace said at the Citi 2018 Global TMT West Conference in Las Vegas on Wednesday.

“The biggest issue that the ratings agencies have [is] that our leverage is very consistent within the REIT industry, certainly within the triple-net REITs, and certainly if you look at some of the tower companies as well.

“Obviously, we do have a concentration with a single tenant, which is never ideal, and I think certainly they want, as we do and our investors do, want us to continue to make good progress on diversification.

“I think making progress on diversification is probably the single largest thing that we can do to impact our cost of capital and improve our cost of capital.

“That said, we have to do that and our goal has been to make acquisitions that diversify us and do that in a high quality way,” Wallace said.

Wallace said that there is no “magic number” that the agencies are seeking for diversification, but he thinks that 50% diversification would be a “meaningful milestone.”

“All of the ratings agencies have slightly different criteria that they use,” Wallace said.

“Some of the ratings agencies will untether our ratings from Windstream, it will be more of a bright line test when you get to a certain diversification.

“Others will do it more on a pro rata basis over time, so there’s not a magic number that I can give you, but I do think that the 50% diversification will be another meaningful milestone,” Wallace said.

Uniti is a Little Rock, Ark.-based real estate investment trust that focuses on the leasing, fiber infrastructure, towers and consumer competitive local exchange carrier segments of the communications industry.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.