AT&T bags $850 million after this lucrative deal

AT&T has completed a sale-leaseback agreement involving a portion of its older central office buildings, securing $850 million in cash.

The deal, made with private real estate firm Reign Capital, involves the transfer of 74 properties across the US, encompassing over 13 million square feet of space, reports the Telecoms news platform.

The properties, originally built to support AT&T's copper network infrastructure, have become largely redundant due to the company’s shift to fiber-optic technology. Fiber networks require significantly less space, as well as reduced power and operating costs, making much of the old real estate unnecessary. Nice.

As part of its broader transition, AT&T plans to phase out the majority of its copper network operations by the end of 2029, aiming to connect 50 million locations with fiber by that time.

As part of the agreement, AT&T will lease back only the space necessary for its critical infrastructure, maintaining full operational control over those areas. Although the company did not reveal details about the lease payments, the $850 million upfront cash injection is expected to remain largely unaffected.

The deal also includes a profit-sharing arrangement, allowing AT&T to benefit from future increases in the properties' value through redevelopment. Additionally, the company secured the right to approve all redevelopment plans, ensuring its infrastructure and operations remain protected.

Michael Ford, AT&T’s head of global real estate, described the deal as an innovative way to generate immediate and long-term value from underused commercial real estate. This move aligns with the company’s broader transformation goals and provides a financial boost for its fiber rollout, an expensive yet essential undertaking.

This is not AT&T's first transaction of this kind. In 2021, it completed a smaller sale-leaseback deal with Reign Capital, selling 13 properties totaling over 3 million square feet for $300 million. That earlier deal has already begun generating redevelopment revenue, and AT&T plans to use the current, larger agreement as a template for similar transactions in the future.

The company emphasized that the deal will not affect customer services or jobs and impacts only a small portion of its central office properties.