Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-16853

SBA COMMUNICATIONS CORPORATION

(Exact name of Registrant as specified in its charter)


Florida	65-0716501
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


8051 Congress Avenue
Boca Raton, Florida	33487
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (561) 995-7670

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-Accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par value per share	SBAC	The NASDAQ Stock Market LLC
		(NASDAQ Global Select Market)

Indicate the number of shares outstanding of each issuer’s classes of common stock, as of the latest practica ble date: 11 3 , 251,125 shares of Class A common stock as of April 30 , 2019 .

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		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018	1
	Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2019 and 2018	2
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2019 and 2018	3
	Consolidated Statement of Shareholders’ Deficit (unaudited) for the three months ended March 31, 2019 and 2018	4
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2019 and 2018	5
	Condensed Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	42

PART II – OTHER INFORMATION
Item 6.	Exhibits	42


SIGNATURES		43

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PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (in thousands, except par values)



	March 31,		December 31,
	2019		2018
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	117,613	$	143,444
Restricted cash		23,883		32,464
Accounts receivable, net		113,017		111,035
Costs and estimated earnings in excess of billings on uncompleted contracts		23,482		23,785
Prepaid expenses and other current assets (1)		22,574		63,126
Total current assets		300,569		373,854
Property and equipment, net (1)		2,761,325		2,786,355
Intangible assets, net		3,258,952		3,331,465
Right-of-use assets, net (1)		2,552,304		—
Other assets (1)		439,609		722,033
Total assets	$	9,312,759	$	7,213,707
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	34,545	$	34,308
Accrued expenses		53,534		63,665
Current maturities of long-term debt		942,442		941,728
Deferred revenue		98,970		108,054
Accrued interest		35,059		48,722
Current lease liabilities (1)		228,776		—
Other current liabilities (1)		11,328		9,802
Total current liabilities		1,404,654		1,206,279
Long-term liabilities:
Long-term debt, net		8,780,606		8,996,825
Long-term lease liabilities (1)		2,282,803		—
Other long-term liabilities (1)		147,477		387,426
Total long-term liabilities		11,210,886		9,384,251
Shareholders' deficit:
Preferred stock - par value $.01, 30,000 shares authorized, no shares issued or outstanding		—		—
Common stock - Class A, par value $.01, 400,000 shares authorized, 113,205
shares and 112,433 shares issued and outstanding at March 31, 2019
and December 31, 2018, respectively		1,132		1,124
Additional paid-in capital		2,359,195		2,270,326
Accumulated deficit		(5,131,347)		(5,136,368)
Accumulated other comprehensive loss, net		(531,761)		(511,905)
Total shareholders' deficit		(3,302,781)		(3,376,823)
Total liabilities and shareholders' deficit	$	9,312,759	$	7,213,707

(1)

On January 1, 2019, the Company adopted ASU 2016-02 which requires lessees to recognize a right-of-use asset and a lease liability. Upon adoption, certain assets and liabilities were reclassified to Right-of-use assets, net and lease liabilities in accordance with provisions of ASU 2016-02. See Note 1 for further discussion .

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited) (in thousands, except per share amounts)


	For the three months
	ended March 31,
	2019		2018
Revenues:	(unaudited)		(unaudited)
Site leasing	$	452,183	$	430,542
Site development		41,110		27,760
Total revenues		493,293		458,302
Operating expenses:
Cost of revenues (exclusive of depreciation, accretion,
and amortization shown below):
Cost of site leasing		92,714		92,817
Cost of site development		31,101		22,520
Selling, general, and administrative (1)(2)		50,959		36,049
Acquisition and new business initiatives related adjustments and expenses		2,437		3,044
Asset impairment and decommission costs		5,771		8,506
Depreciation, accretion, and amortization		171,038		165,398
Total operating expenses		354,020		328,334
Operating income		139,273		129,968
Other income (expense):
Interest income		1,800		1,295
Interest expense		(98,667)		(88,923)
Non-cash interest expense		(641)		(733)
Amortization of deferred financing fees		(5,061)		(5,388)
Loss from extinguishment of debt, net		—		(645)
Other income (expense), net		(508)		4,553
Total other expense, net		(103,077)		(89,841)
Income before income taxes		36,196		40,127
Provision for income taxes		(10,207)		(8,582)
Net income	$	25,989	$	31,545
Net income per common share
Basic	$	0.23	$	0.27
Diluted	$	0.23	$	0.27
Weighted average number of common shares
Basic		112,708		116,494
Diluted		114,344		118,293

(1)

Includes non-cash compensation of $22,605 and $9,893 for the three months ended March 31, 2019 and 2018 , respectively .

(2)

Includes the impact of a partial recovery of $2.3 million of Oi prepetition obligations received during the three months ended March 31, 2019.

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited) (in thousands)



	For the three months
	ended March 31,

	2019		2018
Net income	$	25,989	$	31,545
Change in fair value of cash flow hedge		(15,312)		—
Foreign currency translation adjustments		(4,544)		351
Comprehensive income	$	6,133	$	31,896

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ DEFICIT

(unaudited) (in thousands)



								Accumulated
	Class A			Additional				Other
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss, Net		Total

BALANCE, December 31, 2018	112,433	$	1,124	$	2,270,326	$	(5,136,368)	$	(511,905)	$	(3,376,823)
Net income	—		—		—		25,989		—		25,989
Common stock issued in connection with
stock purchase/option plans	762		8		63,467		—		—		63,475
Non-cash stock compensation	—		—		23,722		—		—		23,722
Common stock issued in connection with
acquisitions	10		—		1,680		—		—		1,680
Change in fair value of cash flow hedge	—		—		—		—		(15,312)		(15,312)
Foreign currency translation adjustments	—		—		—		—		(4,544)		(4,544)
Impact of adoption of ASU 2016-02
related to leases	—		—		—		(20,968)		—		(20,968)
BALANCE, March 31, 2019	113,205	$	1,132	$	2,359,195	$	(5,131,347)	$	(531,761)	$	(3,302,781)



								Accumulated
	Class A			Additional				Other
	Common Stock			Paid-In		Accumulated		Comprehensive
	Shares	Amount		Capital		Deficit		Loss		Total

BALANCE, December 31, 2017	116,446	$	1,164	$	2,167,470	$	(4,388,288)	$	(379,460)	$	(2,599,114)
Net income	—		—		—		31,545		—		31,545
Common stock issued in connection with
stock purchase/option plans	264		3		6,883		—		—		6,886
Non-cash stock compensation	—		—		10,636		—		—		10,636
Repurchase and retirement of common
stock	(238)		(2)		—		(38,543)		—		(38,545)
Foreign currency translation adjustments	—		—		—		—		351		351
BALANCE, March 31, 2018	116,472	$	1,165	$	2,184,989	$	(4,395,286)	$	(379,109)	$	(2,588,241)

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)



	For the three months ended March 31,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	25,989	$	31,545
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization		171,038		165,398
Non-cash asset impairment and decommission costs		5,451		8,446
Non-cash compensation expense		23,414		10,410
Deferred income tax expense		3,470		2,277
Other non-cash items reflected in the Statements of Operations		4,647		2,784
Changes in operating assets and liabilities, net of acquisitions:
AR and costs and est. earnings in excess of billings on uncompleted contracts, net		1,931		(5,198)
Prepaid expenses and other assets		(130)		(9,277)
Operating lease right-of-use assets, net		24,116		—
Accounts payable and accrued expenses		(5,050)		(14,336)
Accrued interest		(13,663)		(15,137)
Long-term lease liabilities		(19,652)		—
Other liabilities		1,104		1,665
Net cash provided by operating activities		222,665		178,577
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions		(55,287)		(117,622)
Capital expenditures		(36,374)		(31,096)
Purchase of investments		(150,053)		(686)
Proceeds from sale of investments		150,557		—
Other investing activities		6,181		(2,193)
Net cash used in investing activities		(84,976)		(151,597)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Revolving Credit Facility		—		265,000
Repayments under Revolving Credit Facility		(215,000)		(70,000)
Repayment of Tower Securities		—		(755,000)
Proceeds from issuance of Tower Securities, net of fees		—		631,848
Repurchase and retirement of common stock		—		(38,545)
Proceeds from employee stock purchase/stock option plans		63,475		6,901
Other financing activities		(6,522)		(6,155)
Net cash (used in) provided by financing activities		(158,047)		34,049
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(14,071)		(504)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(34,429)		60,525
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period		178,300		104,295
End of period	$	143,871	$	164,820

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	For the three months ended March 31,
	2019		2018

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	112,378	$	104,011
Income taxes	$	5,593	$	2,148

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	28,881	$	—
Operating lease modifications and reassessments	$	21,063	$	—
Right-of-use assets obtained in exchange for new finance lease liabilities	$	865	$	260
Common stock issued in connection with acquisitions	$	1,680	$	—

The accompanying condensed notes are an integral part of these consolidated financial statements.

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SBA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2018 for SBA Communications Corporation and its subsidiaries (the “Company”). These financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. The results of operations for an interim period may not give a true indication of the results for the year. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial statements and accompanying notes, the actual amounts, when known, may vary from these estimates.

Foreign Currency Translation

All assets and liabilities of foreign subsidiaries that do not utilize the U.S. dollar as its functional currency are translated at period-end rates of exchange, while revenues and expenses are translated at monthly average rates of exchange prevailing during the period. Unrealized remeasurement gains and losses are reported as foreign currency translation adjustments through Accumulated Other Compre hensive Loss in the Consolidated Statement of Shareholders’ Deficit.

For foreign subsidiaries where the U.S. dollar is the functional currency, monetary assets and liabilities of such subsidiaries, which are not denominated in U.S. dollars, are remeasured at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at monthly average rates prevailing during the year. Unrealized translation gains and losses are reported as other income (expense), net in the Consolidated Statements of Operations.

Intercompany Loans Subject to Remeasurement

In accordance with Accounting Standards Codification (ASC) 830, the Company remeasures foreign denominated intercompany loans with the corresponding change in the balance being recorded in Other income (expense), net in the Consolidated Statements of Operations as settlement is anticipated or planned in the foreseeable future. The Company recorded a $2.1 million loss and a $1.6 million gain on the remeasurement of intercompany loans for the three months ended March 31, 2019 and 2018 , respectively, due to changes in foreign exchange rates. As of March 31, 2019 and December 31, 2018 , the aggregate amount outstanding under the two intercompany loan agreements with the Company’s Brazilian subsidiary was $471.3 million and $536.9 million, respectively.

Leases

The Company ado pted ASU No. 2016-02, Leases ( “ Topic 842 ” ) using the modified retrospective adoption method with an effective date of January 1, 2019. The con solidated financial statements for 2019 are presented under the new standard, while the comparative periods presented are not adjusted and continue to be reported in accordance with the Company's historical accounting policy. This standard requires all lessees to recognize a right-of-use asset and a lease liability, initially measured at the prese nt value of the lease payments. The Company has elected not to separate non lease components from the associated lease component for all underlying class es of assets .

The adoption of the new lease standard had a si gnificant impact on the Company’ s C on solidated B alance S heets resulting in the recognition of $2.6 billion of right-of-use assets , net , $226.0 million of current lease liabilities, and $2.3 billion of long-term lease liabilities . The right-of-use assets included $266.3 million of rent prepayments and financ ing lease right-of-use assets , net which were previously reported in Prepaid expenses and other current assets, Other assets , and Prop erty, Plant and Equipment, net on the Consolidated Balance Sheets. In addition, the Company recognized a $21.0 million cumulative effect adjustment, net of tax, to Accumulated deficit on the Consolidated Balance Sheet re late d to the unamortized deferred lease costs incurred in prior periods which do not meet the definition of init ial direct costs under Topic 842.

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The adoption of Topic 842 did not have a significant impact on the Company ’ s lease classification or a material impact on its Consolidated S tatements of O perations and liquidity. Additionally, the adoption of Topic 842 did not have a materi al impact on the Company’s debt covenant compliance under its current agreements.

The components of the right-of-use assets and lease liabilities as of March 31, 2019 are as follows (in thousands) :



Operating lease right-of-use assets, net	$	2,549,143
Financing lease right-of-use assets, net		3,161
Right-of-use assets, net	$	2,552,304

Current operating lease liabilities	$	227,819
Current financing lease liabilities		957
Current lease liabilities	$	228,776

Long-term operating lease liabilities	$	2,281,561
Long-term financing lease liabilities		1,242
Long-term lease liabilities	$	2,282,803

Operating Leases

Ground leases. The Company enters into long-term lease contracts for land that underlies its tower structures. Ground lease agreements generally include renewal options which can be exercised exclusively at the Company’s election. In making the determination of the period for which the Company is reasonably certain to remain on the site, the Company will assume optional renewals a re reasonably certain of being exercised for the greater of: ( 1) a period sufficient to cover all tenants under their current committed term where the Company has provided rights to the tower not to exceed the contractual ground lease terms including renewals, and ( 2) a period sufficient to recover the investment of significant leasehold improvements located on the site.

Substantially all leases provide for rent rate escalations. The most common provisions provide for fixed rent escalators which typically average 2-3% annually. The Company also has ground leases that include c onsumer price i ndex escalators, particularly in its South American operations. Increases or decreases in lease payments that result from subsequent changes in the index or r ate are accounted for as variable lease payments.

Office leases. The Company’s office leases consist of long-term leases for international, regional, and certain site development office locations. Office leases include a single lease component, lease of the office space and sometimes nonlease components such as common a rea maintenance expenses . The lease term for office leases are generally considered to be the contractually committed term.

Finance Leases

Vehicle leases. The Company leases vehicles that are used in its site development business. These leases are accounted for as financing leases and have lease terms that are contractually committed and do not include optional renewal terms.

Discount Rate

When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, the Company ’ s ground leases generally do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates.

Lease Cost

Variable lease payments includ e escalations based on standard cost of living indexes and are initially recognized using the prevailing index at the date of initial measurement or upon reassessment of the lease term. Subsequent changes in standard cost of living increases are recognized as variable lease costs . Variable lease payments also include contingent rent provisions.

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The components of lease cost, lease term, and discount rate as of March 31, 2019 are as follows :



	(in thousands)
Amortization of right-of-use assets	$	337
Interest on finance lease liabilities		28
Total finance lease cost		365
Operating lease cost (1)		68,299
Variable lease cost (1)		7,742
Total lease cost	$	76,406

Weighted Average Remaining Lease Term:
Operating leases		18.4 years
Finance leases		2.9 years

Weighted Average Discount Rate:
Operating leases		6.1%
Finance leases		3.8%

Other information:
Cash paid for amounts included in measurement of lease liabilities:
Cash flows from operating leases	$	59,458
Cash flows from finance leases	$	337

(1)

F or the three months ended March 31, 2018 , operating lease cost and variable lease cost were $69.6 million and $6.8 million , respectively.

Tenant (Operating) L eases

The Company enters into long-term lease contracts with wireless service providers to lease antenna space on towers that it owns or operates. Each tenant lease relates to the lease or use of space at an individual site. Tenant leases are generally for an initial term of five to ten years with multiple 5 -year renewal periods at the option of the tenant. Tenant leases typically contain specific rent escalators, which can be fixed or escalate in accordance with a standard cost of living index, including the renewal option periods.

Tenant lease agreements generally include renewal options which can be exercised exclusively at the tenant’s election. The only common exception is if the Company no longer has a right to the ground underlying the site, the lease agreements permit the Company to terminate the lease. Despite high frequency of renewal of options to extend the lease by its tenants, the Company has concluded that the exercise of a renewal option by a tenant is not reasonably certain of occurrence ; therefore , only the current committed term is included in the determination of the lease term.

Certain tenant leases provide for a reimbursement of costs incurred by the Company. The Company pays these costs directly and is not relieved of the primary obligation for the expenses. These reimbursements are recorded as r evenue on the Statement s of Operations.

Deferred Lease Costs

Prior to the adoption of ASU 2016-02, the Company deferred certain initial direct costs associated with the origination of tenant leases and lease amendments and amortized these costs over the remaining lease term. These costs included an allocation of a portion of the employees’ total compensa tion and payroll related benefits related to time spent performing those activities. Such deferred costs were approximately $2.8 million for the three months ended March 31, 2018 . Amortization expense related to these

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deferred costs was $3.1 million for the three months ended March 31, 2018 and is included in cost of s ite leasing on the Consolidated Statements of Operations. As of December 31, 2018, unamortized deferred lease costs were $27.0 million.

ASU 2016-02, defines initial direct costs as incremental costs that would not have been incurred if the lease had not been obtained. These costs, including commissions paid related to the origination of specific tenant leases, will continue to be deferred and amortized over the remaining lease term. Upon adoption, the Company recognized a $21.0 million cumulative effect adjustment, net of tax, to Accumulated deficit on the Consolidated Balance Sheet s . This adjustment reflects the recognition of unamortized deferred lease costs incurred in prior periods which do not meet the definition o f initial direct costs under Topic 842.

Initial direct costs were approximately $0.6 million for the three months ended March 31, 2019 . Amortization e xpense related to these deferred costs was $0.4 million for the three months ended March 31, 2019 . As of March 31, 2019 , unamortized deferred lease costs were $4.1 million and were included in other assets on the Consolidated Balance Sheets .

2. FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis — The Company’s earnout liabilities related to business combinations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Accrued expenses in the Consolidated Balance Sheets. Changes in estimates are recorded in Acquisition and new business initiatives related adjustments and expenses in the Consolidated Statements of Operations. The Company determines the fair value of earnouts (contingent consideration) and any subsequent changes in fair value using a discounted probability-weighted approach using Level 3 inputs. Level 3 valuations rely on unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The fair value of the earnouts is reviewed quarterly and is based on the payments the Company expects to make based on historical internal observations related to the anticipated performance of the underlying assets. The Company’s estimate of the fair value of its obligation contained in acquisitions prior to January 1, 2017 (adoption of ASU 2017-01) was $0.4 million and $0.5 million as of March 31, 2019 and December 31, 2018 , respectively. The maximum potential obligation related to the performance targets for these acquisitions was $0.6 million and $0.7 million as of March 31, 2019 and December 31, 2018 , respectively. The maximum potential obligation related to the performance targets for acquisitions after January 1, 2017, which have not been recorded on the Company’s Consolidated Balance Sheet, were $10.3 million and $13.3 million as of March 31, 2019 and December 31, 2018 , respectively.

On February 1, 2019, the Company, through its wholly owned subsidiary, SBA Senior Finance II, LLC, entered into a four -year interest rate swap on a portion of its 2018 Term Loan in order to reduce the Company’s exposure to fluctuations in interest rates. The interest rate swap has a $1.2 billion notional value receiving interest at one month LIBOR plus 200 basis points and paying a fixed rate of 4.495% per annum settled monthly. The Company designated this swap as a cash flow hedge. On a quarterly basis, the Company evaluates whether the swap remains highly effective in offsetting changes in cash flows. As of March 31, 2019 , the Company believes that the hedge remains highly effective and changes in the fair value were recorded in Accumulated other comprehensive loss, net on the Consolidated Balance Sheets. As of March 31, 2019 , the fair value of the swap using Level 2 inputs was a liability of $15.3 million and was included within Other long-term liabilities on the Consolidated Balance Sheets. Changes in the fair value of the swap are reflected within Accumulated other comprehensive loss, net. The Company is exposed to counterparty credit risk to the extent that a counterparty fails to meet the terms of a contract. The Company’s exposure is limited to the current value of the contract at the time the counterparty fails to perform.

The Company’s asset retirement obligations are measured at fair value on a recurring basis using Level 3 inputs and are recorded in Other long-term liabilities in the Consolidated Balance Sheets. The fair value of the asset retirement obligations is calculated using a discounted cash flow model.

Items Measured at Fair Value on a Nonrecurring Basis — The Company’s long-lived and intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. The Company considers many factors and makes certain assumptions when making this assessment, including but not limited to: general market and economic conditions, historical operating results, geographic location, lease-up potential and expected timing of lease-up. The fair value of the long-lived and intangible assets is calculated using a discounted cash flow model.

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Asset impairment and decommission costs for all periods presented and the related impaired assets primarily relate to the Company’s site leasing operating segment. The following summarizes the activity of asset impairment and decommission costs (in thousands):



	For the three months
	ended March 31,
	2019		2018

Asset impairment (1)	$	3,303	$	5,855
Write-off of carrying value of decommissioned towers		2,157		2,001
Other (including third party decommission costs)		311		650
Total asset impairment and decommission costs	$	5,771	$	8,506

(1)

Represents impairment charges resulting from the Company’s regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers.

Fair Value of Financial Instruments — The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and short-term investments approximate their estimated fair values due to the short maturity of these instruments. Short-term investments consisted of $0.2 million in Treasury securities as of March 31, 2019 and December 31, 2018 . The Company’s estimate of the fair value of its held-to-maturity investments in treasury and corporate bonds, including current portion, are based primarily upon Level 1 reported market values. As of March 31, 2019 and December 31, 2018 , the carrying value and fair value of the held-to-maturity investments, including current portion, were $0.2 million. The current portion is recorded in Prepaid and other current assets in the Consolidated Balance Sheets, while held-to-maturity investments are recorded in Other assets. For the three months ended March 31, 2019 , the Company purchased and sold $150.0 million of short -term investments.

The Company determines fair value of its debt instruments utilizing various Level 2 sources including quoted prices and indicative quotes (non-binding quotes) from brokers that require judgment to interpret market information including implied credit spreads for similar borrowings on recent trades or bid/ask prices. The fair value of the Revolving Credit Facility is considered to approximate the carrying value because the interest payments are based on Eurodollar rates that reset monthly or more frequently. The Company does not believe its credit risk has changed materially from the date the applicable Eurodollar Rate was set for the Revolving Credit Facility ( 112.5 to 175.0 basis points). Refer to Note 10 for the fair values, principal balances, and carrying values of the Company’s debt instruments.

3. RESTRICTED CASH

The cash, cash equivalents, and r estricted cash balances on the Consolidated Statements of Cash F lows consists of the following:



	As of		As of
	March 31, 2019		December 31, 2018		Included on Balance Sheet

		(in thousands)
Cash and cash equivalents	$	117,613	$	143,444
Securitization escrow accounts		23,682		32,261	Restricted cash - current asset
Payment and performance bonds		201		203	Restricted cash - current asset
Surety bonds and workers compensation		2,375		2,392	Other assets - noncurrent
Total cash, cash equivalents, and restricted cash	$	143,871	$	178,300

Pursuant to the terms of the Tower Securities (see Note 10), the Company is required to establish a securitization escrow account, held by the indenture trustee, into which all rents and other sums due on the towers that secure the Tower Securities are directly deposited by the lessees. These restricted cash amounts are used to fund reserve accounts for the payment of (1) debt service costs, (2) ground rents, real estate and personal property taxes and insurance premiums related to towers, (3) trustee and servicing expenses, and (4) management fees. The restricted cash in the securitization escrow account in excess of required reserve balances is subsequently released to the Borrowers (as defined in Note 10) monthly, provided that the Borrowers are in compliance with their debt service coverage ratio and that no event of default has occurred. All monies held by the indenture trustee are classified as restricted cash on the Company’s Consolidated Balance Sheets.

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Payment and performance bonds relate primarily to c ollateral requirements for tower construction currently in process by the Company. Cash is pledged as collateral related to surety bonds issued for the benefit of the Company or its affiliates in the ordinary course of business and primarily related to the Company’s tower removal obligations. As of March 31, 2019 and December 31, 2018 , the Company had $40.6 million and $40.5 million in surety, payment and performance bonds, respectively, for which no collateral was required to be posted. The Company periodically evaluates the collateral posted for its bonds to ensure that it meets the minimum requirements. As of March 31, 2019 and December 31, 2018 , the Company had also pledged $2.3 million and $2.2 million, respectively, as collateral related to its workers compensation policy .

4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

The Company’s costs and estimated earnings on uncompleted contracts are comprised of the following:



	As of		As of
	March 31, 2019		December 31, 2018

	(in thousands)
Costs incurred on uncompleted contracts	$	44,842	$	38,464
Estimated earnings		18,678		16,655
Billings to date		(42,058)		(31,952)
	$	21,462	$	23,167

These amounts a re included in the Consolidated Balance Sheets under the following captions:



	As of		As of
	March 31, 2019		December 31, 2018

	(in thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts	$	23,482	$	23,785
Billings in excess of costs and estimated earnings on
uncompleted contracts (included in Other current liabilities)		(2,020)		(618)
	$	21,462	$	23,167

At March 31, 2019 and December 31, 2018 , eight customers comprised 97.7% and 96.3% of the contract assets, net of contract liabilities.

5. ACQUISITIONS

The following table summarizes the Company’s acquisition activity:



	For the three months
	ended March 31,
	2019		2018

	(in thousands)
Acquisitions of towers and related intangible assets (1)	$	42,148	$	108,355
Land buyouts and other assets (2)		13,139		9,267
Total cash acquisition capital expenditures	$	55,287	$	117,622

(1)

The three months ended March 31, 2019 excludes $1.7 million of acquisition costs funded through the issuance of 10,000 shares of Class A common stock.

(2)

In addition, the Company paid $3.8 million and $6.6 million for ground lease extensions and term easements on land underlying the Company’s towers during the three months ended March 31, 2019 and 2018 , respectively. The Company recorded these amounts in prepaid rent on its Consolidated Balance Sheets.

During the three months ended March 31, 2019 , the Company acquired 54 completed towers and related assets and liabilities consisting of $6.6 million of property and equipment, $33.6 million of intangible assets, and $1.9 million of other net asset balances.

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All acquisitions in the quarter ended March 31, 2019 were accounted for as asset acquisitions except for one acquisition, purchased for $3.0 million in cash and $1.7 million in the Company’s Class A common stock, which was accounted for as a business combination .

6. PREPAID EXPENSES AND OTHER CURRENT ASSETS AND OTHER ASSETS

The Company’s prepaid expenses and other current assets are comprised of the following:



	As of		As of
	March 31, 2019		December 31, 2018

		(in thousands)
Prepaid ground rent (1)	$	1,649	$	34,276
Loan receivables		—		11,178
Other		20,925		17,672
Total prepaid expenses and other current assets	$	22,574	$	63,126

(1)

Decrease is due to the adoption of ASU 2016-02. Prepaid ground rent was reclassified to Right-of-use assets, net on the Consolidated Balance Sheets in the first quarter of 2019.

The Company’s other assets are comprised of the following:



	As of		As of
	March 31, 2019		December 31, 2018

		(in thousands)
Prepaid ground rent (1)	$	—	$	263,694
Straight-line rent receivable		323,708		322,073
Loan receivables		54,490		49,255
Deferred lease costs, net (1)		4,054		27,020
Deferred tax asset - long term		15,830		18,330
Other		41,527		41,661
Total other assets	$	439,609	$	722,033

(1)

Decrease is due to the adoption of ASU 2016-02. Prepaid ground rent was reclassified from Other assets to Right-of-use assets, net on the Consolidated Balance Sheets in the first quarter of 2019. Deferred lease costs of $23.3 million were written off to Accumulated deficit on the Consolidated Balance Sheets in the first quarter of 2019.

7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:



	As of		As of
	March 31, 2019		December 31, 2018

	(in thousands)
Towers and related components	$	4,986,046	$	4,951,321
Construction-in-process		33,943		35,756
Furniture, equipment, and vehicles (1)		46,450		54,814
Land, buildings, and improvements		679,823		668,459
Total property and equipment		5,746,262		5,710,350
Less: accumulated depreciation (1)		(2,984,937)		(2,923,995)
Property and equipment, net	$	2,761,325	$	2,786,355

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(1)

Fina ncing lease right-of-use assets are included in the prior period but are include d in R ight-of-use assets, net on the C onsolidated B alance S heet s for the current period .

Construction-in-process represents costs incurred related to towers that are under development and will be used in the Company’s site leasing operations. Depreciation expense was $69.2 million and $65.0 million for the three months ended March 31, 2019 and 2018 , respectively . At March 31, 2019 and December 31, 2018 , unpaid capital expenditures that are included in accounts payable and accrued expenses were $8.4 million and $12.4 million , respectively.

8. INTANGIBLE ASSETS, NET

The following table provides the gross and net carrying amounts for each major class of intangible assets:



	As of March 31, 2019						As of December 31, 2018
	Gross carrying		Accumulated		Net book		Gross carrying		Accumulated		Net book
	amount		amortization		value		amount		amortization		value

	(in thousands)
Current contract intangibles	$	4,417,240	$	(1,998,596)	$	2,418,644	$	4,394,416	$	(1,928,030)	$	2,466,386
Network location intangibles		1,672,530		(832,222)		840,308		1,669,859		(804,780)		865,079
Intangible assets, net	$	6,089,770	$	(2,830,818)	$	3,258,952	$	6,064,275	$	(2,732,810)	$	3,331,465

All intangible assets noted above are included in the Company’s site leasing segment. Amortization expense relating to the intangible assets above was $101.8 million and $100.3 million for the three months ended March 31, 2019 and 2018 , respectively .

9. ACCRUED EXPENSES

The Company’s accrued expenses are comprised of the following:



	As of		As of
	March 31, 2019		December 31, 2018

	(in thousands)
Salaries and benefits	$	7,669	$	16,015
Real estate and property taxes		7,768		7,928
Unpaid capital expenditures		8,435		12,387
Other		29,662		27,335
Total accrued expenses	$	53,534	$	63,665

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10. DEBT

The principal values, fair values, and carrying values of debt consist of the following (in thousands):



		As of						As of
		March 31, 2019						December 31, 2018
	Maturity Date	Principal Balance		Fair Value		Carrying Value		Principal Balance		Fair Value		Carrying Value
2014 Senior Notes	Jul. 15, 2022	$	750,000	$	761,250	$	741,839	$	750,000	$	735,000	$	741,273
2016 Senior Notes	Sep. 1, 2024		1,100,000		1,108,250		1,084,315		1,100,000		1,034,000		1,083,689
2017 Senior Notes	Oct. 1, 2022		750,000		751,875		743,525		750,000		712,500		743,099
2013-2C Tower Securities	Apr. 11, 2023		575,000		572,591		569,999		575,000		569,164		569,715
2014-1C Tower Securities	Oct. 8, 2019		920,000		916,348		918,442		920,000		914,241		917,728
2014-2C Tower Securities	Oct. 8, 2024		620,000		630,112		614,534		620,000		609,665		614,315
2015-1C Tower Securities	Oct. 8, 2020		500,000		498,850		496,317		500,000		496,640		495,737
2016-1C Tower Securities	Jul. 9, 2021		700,000		693,714		695,474		700,000		691,432		694,994
2017-1C Tower Securities	Apr. 11, 2022		760,000		752,856		753,529		760,000		744,496		753,028
2018-1C Tower Securities	Mar. 9, 2023		640,000		644,922		633,118		640,000		641,478		632,725
Revolving Credit Facility	Apr. 11, 2023		110,000		110,000		110,000		325,000		325,000		325,000
2018 Term Loan	Apr. 11, 2025		2,382,000		2,340,315		2,361,956		2,388,000		2,262,630		2,367,250
Total debt		$	9,807,000	$	9,781,083	$	9,723,048	$	10,028,000	$	9,736,246	$	9,938,553
Less: current maturities of long-term debt							(942,442)						(941,728)
Total long-term debt, net of current maturities						$	8,780,606					$	8,996,825

The table below reflects cash and non-cash interest expense amounts recognized by debt instrument for the periods presented:



	For the three months ended March 31,
	2019				2018
	Cash		Non-cash		Cash		Non-cash
	Interest		Interest		Interest		Interest

	(in thousands)
2014 Senior Notes	$	9,141	$	196	$	9,141	$	187
2016 Senior Notes		13,406		259		13,406		246
2017 Senior Notes		7,500		—		7,500		—
2013 Tower Securities		5,396		—		9,475		—
2014 Tower Securities		12,785		—		12,785		—
2015-1C Tower Securities		3,985		—		3,985		—
2016-1C Tower Securities		5,090		—		5,090		—
2017-1C Tower Securities		6,085		—		6,085		—
2018-1C Tower Securities		5,570		—		1,362		—
Revolving Credit Facility		2,836		—		1,601		—
2014 Term Loan		—		—		13,947		131
2015 Term Loan		—		—		4,697		169
2018 Term Loan		26,922		186		—		—
Other		(49)		—		(151)		—
Total	$	98,667	$	641	$	88,923	$	733

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Senior Credit Agreement

Revolving Credit Facility under the Senior Credit Agreement

The Revolving Credit Facility consists of a revolving loan under which up to $1.25 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either (1) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 175.0 basis points or (2) the Base Rate plus a margin that ranges from 12.5 basis points to 75.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance II is required to pay a commitment fee of between 0.20% and 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, April 11, 2023 . The proceeds available under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of the period may not be reflective of the total amounts outstanding during such period.

During the three months ended March 31, 2019 , the Company repaid $215.0 million of the outstanding balance under the Revolving Credit Facility. As of March 31, 2019 , the balance outstanding under the Revolving Credit Facility was $110.0 million accruing interest at 4.16% per annum. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.25% per annum on the amount of the unused commitment. As of March 31, 2019 , SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement .

Subsequent to March 31, 2019 , the Company repaid $60.0 million of the outstanding balance under the Revolving Credit Facility. As of the date of this filing, $ 50.0 million was outstanding under the Revolving Credit Facility.

Term Loans under the Senior Credit Agreement

2014 Term Loan

The 2014 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $1.5 billion that was scheduled to mature on March 24, 2021 . The 2014 Term Loan accrued interest, at SBA Senior Finance II’s election, at either the Base Rate plus 125 basis points (with zero Base Rate floor) or the Eurodollar Rate plus 225 basis points (with a zero Eurodollar Rate floor). The 2014 Term Loan was originally issued at 99.75% of par value. Principal payments on the 2014 Term Loan commenced on September 30, 2014 and were being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $3.8 million. The Company incurred deferred financing fees of approximately $14.1 million in relation to this transaction, which were being amortized through the maturity date.

During the three months ended March 31, 2018, the Company repaid $3.8 million of principal on the 2014 Term Loan. On April 11, 2018, the Company repaid the remaining $1,443.8 million outstanding principal balance of the 2014 Term Loan with proceeds from the 2018 Term Loan. In connection with the repayment, the Company expensed $5.8 million of net deferred financing fees and $1.7 million of discount related to the debt.

2015 Term Loan

The 2015 Term Loan consisted of a senior secured term loan with an initial aggregate principal amount of $500.0 million that was scheduled to mature on June 10, 2022 . The 2015 Term Loan accrued interest, at SBA Senior Finance II’s election at either the Base Rate plus 125 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 225 basis points (with a zero Eurodollar Rate floor). The 2015 Term Loan was originally issued at 99.0% of par value. Principal payments on the 2015 Term Loan commenced on September 30, 2015 and were being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $1.3 million. The Company incurred deferred financing fees of approximately $5.5 million in relation to this transaction, which were being amortized through the maturity date.

During the three months ended March 31, 2018, the Company repaid $1.3 million of principal on the 2015 Term Loan. On April 11, 2018, the Company repaid the remaining $486.3 million outstanding principal balance of the 2015 Term Loan with proceeds from the 2018 Term Loan. In connection with the repayment, the Company expensed $3.2 million of net deferred financing fees and $3.1 million of discount related to the debt.

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2018 Term Loan

On April 11, 2018, the Company, through its wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement. The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025 . The 2018 Term Loan accrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 100 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 200 basis points (with a zero Eurodollar Rate floor). The 2018 Term Loan was issued at 99.75% of par value. As of March 31, 2019 , the 2018 Term Loan was accruing interest at 4.50% per annum. Principal payments on the 2018 Term Loan commenced on September 30, 2018 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $6.0 million. The Company incurred deferred financing fees of approximately $16.8 million in relation to this transaction, which are being amortized through the maturity date. The proceeds from the 2018 Term Loan were used (1) to retire the outstanding $1.93 billion in aggregate principal amount of the 2014 Term Loan and 2015 Term Loan, (2) to pay down the existing outstanding balance under the Revolving Credit Facility, and (3) for general corporate purposes.

During the three months ended March 31, 2019 , the Company repaid an aggregate of $6.0 million of principal on the 2018 Term Loan. As of March 31, 2019 , the 2018 Term Loan had a principal balance of $2.4 billion.

Secured Tower Revenue Securities

2013 Tower Securities

On April 18, 2013, the Company, through a New York common law trust (the “Trust”), issued $425.0 million of 2.240% Secured Tower Revenue Securities Series 2013-1C, which had an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (the “2013-1C Tower Securities”), $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C, which have an anticipated repayment date of April 11, 2023 and a final maturity date of April 9, 2048 (the “2013-2C Tower Securities”), and $330.0 million of 3.598% Secured Tower Revenue Securities Series 2013-1D, which had an anticipated repayment date of April 10, 2018 and a final maturity date of April 9, 2043 (the “2013-1D Tower Securities”) (collectively the “2013 Tower Securities”). The aggregate $1.33 billion of 2013 Tower Securities had a blended interest rate of 3.218% per annum, payable monthly. The Company incurred financing fees of $25.5 million in relation to this transaction, which were being amortized through the anticipated repayment date of each of the 2013 Tower Securities.

On March 9, 2018, the Company repaid the entire aggregate principal amount of the 2013-1C Tower Securities and 2013-1D Tower Securities in connection with the issuance of the 2018-1C Tower Securities (as defined below).

The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage loan (the “Borrowers”).

2014 Tower Securities

On October 15, 2014, the Company, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-1C, which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044 (the “2014-1C Tower Securities”) and $620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C, which have an anticipated repayment date of October 8, 2024 and a final maturity date of October 8, 2049 (the “2014-2C Tower Securities”) (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities have a blended interest rate of 3.289% per annum, payable monthly. The Company incurred financing fees of $22.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.

2015-1C Tower Securities

On October 14, 2015, the Company, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C, which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015-1C Tower Securities”). The fixed interest rate of the 2015-1C Tower Securities is 3.156% per annum, payable monthly. The Company

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incurred financing fees of $11.2 million in relation to this tra nsaction, which are being amortized through the anticipated repayment date of the 2015-1C Tower Securities.

2016-1C Tower Securities

On July 7, 2016, the Company, through the Trust, issued $700.0 million of Secured Tower Revenue Securities Series 2016-1C, which have an anticipated repayment date of July 9, 2021 and a final maturity date of July 10, 2046 (the “2016-1C Tower Securities”). The fixed interest rate of the 2016-1C Tower Securities is 2.877% per annum, payable monthly. The Company incurred financing fees of $9.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2016-1C Tower Securities.

2017-1C Tower Securities

On April 17, 2017, the Company, through the Trust, issued $760.0 million of Secured Tower Revenue Securities Series 2017-1C, which have an anticipated repayment date of April 11, 2022 and a final maturity date of April 9, 2047 (the “2017-1C Tower Securities”). The fixed interest rate on the 2017-1C Tower Securities is 3.168% per annum, payable monthly. Net proceeds from this offering were used to prepay the entire $610.0 million aggregate principal amount, as well as accrued and unpaid interest, of the 2012-1C Tower Securities and for general corporate purposes. The Company incurred financing fees of $10.2 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2017-1C Tower Securities.

In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), SBA Guarantor, LLC, a wholly owned subsidiary, purchased $40.0 million of Secured Tower Revenue Securities Series 2017-1R issued by the Trust, which have an anticipated repayment date of April 11, 2022 and a final maturity date of April 9, 2047 (the “2017-1R Tower Securities”). The fixed interest rate on the 2017-1R Tower Securities is 4.459% per annum, payable monthly. Principal and interest payments made on the 2017-1R Tower Securities eliminate in consolidation.

2018-1C Tower Securities

On March 9, 2018, the Company, through the Trust, issued $640.0 million of Secured Tower Revenue Securities Series 2018-1C, which have an anticipated repayment date of March 9, 2023 and a final maturity date of March 9, 2048 (the “2018-1C Tower Securities”). The fixed interest rate on the 2018-1C Tower Securities is 3.448% per annum, payable monthly. Net proceeds from this offering, in combination with borrowings under the Revolving Credit Facility, were used to repay the entire aggregate principal amount of the 2013-1C Tower Securities ( $425.0 million) and 2013-1D Tower Securities ( $330.0 million), as well as accrued and unpaid interest. The Company incurred financing fees of $8.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2018-1C Tower Securities.

In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Exchange Act, SBA Guarantor, LLC, a wholly owned subsidiary, purchased $33.7 million of Secured Tower Revenue Securities Series 2018-1R issued by the Trust. These securities have an anticipated repayment date of March 9, 2023 and a final maturity date of March 9, 2048 (the “2018-1R Tower Securities”). The fixed interest rate on the 2018-1R Tower Securities is 4.949% per annum, payable monthly. Principal and interest payments made on the 2018-1R Tower Securities eliminate in consolidation.

In connection with the issuance of the 2018-1C Tower Securities, the non-recourse mortgage loan was increased by $673.7 million (but decreased by a net of $81.3 million after giving effect to prepayment of the loan components relating to the 2013-1C Tower Securities and 2013-1D Tower Securities). The new loan, after eliminating the risk retention securities, accrues interest at the same rate as the 2018-1C Tower Securities and is subject to all other material terms of the existing mortgage loan, including collateral and interest rate after the anticipated repayment date.

Debt Covenants

As of March 31, 2019 , the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

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Senior Notes

2014 Senior Notes

On July 1, 2014, the Company issued $750.0 million of unsecured senior notes due July 15, 2022 (the “2014 Senior Notes”). The 2014 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2014 Senior Notes is due semi-annually on January 15 and July 15 of each year. The Company incurred financing fees of $11.6 million in relation to this transaction, which are being amortized through the maturity date.

The 2014 Senior Notes are subject to redemption in whole or in part at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. The Company may redeem the 2014 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: July 15, 2019 at 101.219% or July 15, 2020 until maturity at 100.000% of the principal amount of the 2014 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

2016 Senior Notes

On August 15, 2016, the Company issued $1.1 billion of unsecured senior notes due September 1, 2024 (the “2016 Senior Notes”). The 2016 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2016 Senior Notes is due semi-annually on March 1 and September 1 of each year, beginning on March 1, 2017. The Company incurred financing fees of $12.8 million in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering and cash on hand were used to redeem $800.0 million , the aggregate principal amount outstanding, of Telecommunications’ 5.75% Senior Notes and $250.0 million of the Company’s 5.625% Senior Notes and pay the associated call premiums.

The 2016 Senior Notes are subject to redemption in whole or in part on or after September 1, 2019 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to September 1, 2019, the Company may at its option redeem up to 35% of the aggregate principal amount of the 2016 Senior Notes originally issued at a redemption price of 104.875% of the principal amount of the 2016 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. The Company may redeem the 2016 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: September 1, 2019 at 103.656% , September 1, 2020 at 102.438% , September 1, 2021 at 101.219% , or September 1, 2022 until maturity at 100.000% , of the principal amount of the 2016 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

2017 Senior Notes

On October 13, 2017, the Company issued $750.0 million of unsecured senior notes due October 1, 2022 (the “2017 Senior Notes”). The 2017 Senior Notes accrue interest at a rate of 4.0% per annum. Interest on the 2017 Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018. The Company incurred financing fees of $8.9 million in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering were used to repay $460.0 million outstanding under the Revolving Credit Facility and for general corporate purposes.

The 2017 Senior Notes are subject to redemption in whole or in part on or after October 1, 2019 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prio r to October 1, 2020, the Company may, at its option, redeem up to 35% of the aggregate principal amount of the 2017 Senior Notes originally issued at a redemption price of 104.000% of the principal amount of the 2017 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. The Company may redeem the 2017 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: October 1, 2019 at 102.000% , October 1, 2020 at 101.000% , or October 1, 2021 until maturity at 100.000% , of the principal amount of the 2017 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

11. SHAREHOLDERS’ EQUITY

Common Stock Equivalents

The Company has outstanding stock options and restricted stock units which were considered in the Company’s diluted earnings per share calculation (see Note 15).

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Stock Repurchases

On February 16, 2018, the Company’s Board of Directors authorized a $1.0 billion stock repurchase plan, replacing the plan authorized on January 12, 2017. This plan authorizes the Company to purchase, from time to time, up to $1.0 billion of the outstanding Class A common stock through open market repurchases in compliance with Rule 10b-18 under the Exchange Act and/or in privately negotiated transactions at management’s discretion based on market and business conditions, applicable legal requirements and other factors. Shares repurchased are retired. The plan has no time de adline and will continue until otherwise modified or terminated by the Company’s Board of Directors at any time in its sole discretion. During the three months ended March 31, 2019 , t he Company did no t repurchase any shares of its Class A common stock. As of the date of this filing, the Company had $204.5 million of authorization remaining under the current stock repurchase plan.

12. STOCK-BASED COMPENSATION

Stock Options

The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model with the assumptions included in the table below. The Company uses a combination of historical data and historical volatility to establish the expected volatility, as well as to estimate the expected option life. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following assumptions were used to estimate the fair value of options granted using the Black-Scholes option-pricing model:



	For the three months ended
	March 31,
	2019	2018

Risk free interest rate	2.47%	2.57%
Dividend yield	1.3%	0.7%
Expected volatility	20%	22%
Expected lives	4.6 years	4.6 years

The following table summarizes the Company’s activities with r espect to its stock option plans for the three months ended March 31, 2019 as follows (dollars and shares in thousands, except for per share data):



		Weighted-		Weighted-Average
		Average		Remaining
	Number	Exercise Price		Contractual	Aggregate
	of Shares	Per Share		Life (in years)	Intrinsic Value
Outstanding at December 31, 2018	4,816	$	114.48
Granted	1,035	$	182.30
Exercised	(663)	$	102.44
Forfeited/canceled	(33)	$	127.79
Outstanding at March 31, 2019	5,155	$	129.57	4.6	$	361,222
Exercisable at March 31, 2019	2,550	$	108.03	3.4	$	233,659
Unvested at March 31, 2019	2,605	$	150.67	5.9	$	127,563

The weighted-average per share fair value of options granted during the three months ended March 31, 2019 was $33.84 . The total intrinsic value for options exercised during the three months ended March 31, 2019 was $54.1 million.

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Restricted Stock Units

The following table summarizes the Company’s restricted stock unit activity for the three months ended March 31, 2019 :



		Weighted-Average
	Number of	Grant Date Fair
	Shares	Value per Share
	(in thousands)
Outstanding at December 31, 2018	324	$	128.69
Granted	126	$	182.30
Vested	(123)	$	125.37
Forfeited/canceled	(5)	$	135.24
Outstanding at March 31, 2019	322	$	150.94

During 2018, the Board of Directors adopted a retirement policy applicable to all employees receiving equity as part of their compensation plan. This policy is effective January 1, 2019. Historically, all unvested outstanding equity awards were forfeited upon termination of employment and any options that were vested but unexercised would be forfeited 90 days after the termination of employment. The new retirement policy allows employees that meet certain conditions to vest or continue vesting in outstanding equity awards following retirement and extends the time the employee has to exercise vested and outstanding awards. As a result of this policy, stock compensation expense related to the adoption of the policy resulted in an acceleration of unrecognized stock compensation expense of approximately $11.2 million and $7.3 million in the first and second quarter of 2019, respectively.

13. INCOME TAXES

The primary reasons for the difference between the Company’s effective tax rate and the U.S. statutory rate are the Company’s REIT election and the Company’s full valuation allowance on the net deferred tax assets of the U.S. taxable REIT subsidiary (“TRS”). The Company has concluded that it is not more likely than not that its deferred tax assets will be realized and has recorded a full valuation allowance. A foreign tax provision is recognized because certain foreign subsidiaries of the Company have profitable operations or are in a net deferred tax liability position.

The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2016. As a REIT, the Company generally will be entitled to a deduction for dividends that it pays, and therefore, not subject to U.S. federal corporate income tax on that portion of its net income that it distributes to its shareholders. As a REIT, the Company will continue to pay U.S. federal income tax on earnings, if any, from assets and operations held through its TRSs. These assets and operations currently consist primarily of the Company’s site development services and its international operations. The Company’s international operations would continue to be subject, as applicable, to foreign taxes in the jurisdictions in which those operations are located. The Company may also be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, property, and other taxes on its assets and operations. The Company’s determination as to the timing and amount of future dividend distributions will be based on a number of factors, including REIT distribution requirements, its existing federal net operating losses (“NOLs”) of approximately $755.4 million as of December 31, 2018, the Company’s financial condition, earnings, debt covenants, and other possible uses of such funds. The Company may use these NOLs to offset its REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized.

14. SEGMENT DATA

The Company operates principally in two business segments: site leasing and site development. The Company’s site leasing business includes two reportable segments, domestic site leasing and international site leasing. The Company’s business segments are strategic business units that offer different services. They are managed separately based on the fundamental differences in their operations. The site leasing segment includes results of the managed and sublease businesses. The site development segment includes the results of both consulting and construction related activities. The Company’s Chief Operating Decision Maker utilizes segment operating profit and operating income as his two measures of segment profit in assessing performance and allocating resources at the reportable segment level. The Company has applied the aggregation criteria to operations within the international site leasing segment on a basis that is consistent with management’s review of information and performance evaluations of the individual markets in this region.

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Revenues, cost of revenues (exclusive of depreciation, accretion and amortization), capital expenditures (including assets acquired through the issuance of shares of the Company’s Class A common stock) and identifiable assets pertaining to the segments in which the Company continues to operate are presented below.



	Domestic Site		Int'l Site		Site		Not Identified
	Leasing		Leasing		Development		by Segment		Total

For the three months ended March 31, 2019	(in thousands)
Revenues	$	362,838	$	89,345	$	41,110	$	—	$	493,293
Cost of revenues (2)		65,114		27,600		31,101		—		123,815
Operating profit		297,724		61,745		10,009		—		369,478
Selling, general, and administrative		28,893		5,688		5,706		10,672		50,959
Acquisition and new business initiatives related
adjustments and expenses		708		1,729		—		—		2,437
Asset impairment and decommission costs		3,634		2,137		—		—		5,771
Depreciation, amortization and accretion		130,244		38,795		562		1,437		171,038
Operating income (loss)		134,245		13,396		3,741		(12,109)		139,273
Other expense (principally interest expense
and other income (expense))								(103,077)		(103,077)
Income before income taxes										36,196
Cash capital expenditures (3)		61,509		29,517		925		575		92,526

For the three months ended March 31, 2018
Revenues	$	341,707	$	88,835	$	27,760	$	—	$	458,302
Cost of revenues (2)		65,015		27,802		22,520		—		115,337
Operating profit		276,692		61,033		5,240		—		342,965
Selling, general, and administrative		19,339		6,614		4,077		6,019		36,049
Acquisition and new business initiatives related
adjustments and expenses		1,786		1,258		—		—		3,044
Asset impairment and decommission costs		6,726		1,502		278		—		8,506
Depreciation, amortization and accretion		123,458		39,680		642		1,618		165,398
Operating income (loss)		125,383		11,979		243		(7,637)		129,968
Other expense (principally interest expense
and other income (expense))								(89,841)		(89,841)
Income before income taxes										40,127
Cash capital expenditures (3)		71,019		77,056		267		636		148,978



	Domestic Site		Int'l Site		Site		Not Identified
	Leasing		Leasing		Development		by Segment (1)		Total

Assets	(in thousands)
As of March 31, 2019	$	6,507,029	$	2,653,344	$	67,784	$	84,602	$	9,312,759
As of December 31, 2018	$	5,035,826	$	2,042,800	$	60,775	$	74,306	$	7,213,707

(1)

Assets not identified by segment consist primarily of general corporate assets.

(2)

Excludes depreciation, amortization, and accretion.

(3)

Includes cash paid for capital expenditures and acquisitions and financing leases .

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Other than Brazil, no foreign country represented a material amount of the Company’s total revenues in any of the periods presented. Site leasing revenue in Brazil was $56.0 million and $61.2 million for the three months ended March 31, 2019 and 2018 , respectively. Total long-lived assets in Brazil were $1,005.6 million and $1,031.6 million as of March 31, 2019 and December 31, 2018 , respectively .

15. EARNINGS PER SHARE

Basic earnings per share was computed by dividing net income attributable to common shareholders by the weighted-average number of shares of Common Stock outstanding for each respective period. Diluted earnings per share was calculated by dividing net income attributable to common shareholders by the weighted-average number of shares of Common Stock outstanding adjusted for any dilutive Common Stock equivalents, including unvested restricted stock and shares issuable upon exercise of stock options as determined under the “If-Converted” method and also Common Stock warrants as determined under the “Treasury Stock” method.

The following table sets forth basic and diluted net income per common share for the three months ended March 31, 2019 and 2018 (in thousands, except per share data):



	For the three months
	ended March 31,
	2019		2018
Numerator:
Net income	$	25,989	$	31,545
Denominator:
Basic weighted-average shares outstanding		112,708		116,494
Dilutive impact of stock options and restricted shares		1,636		1,799
Diluted weighted-average shares outstanding		114,344		118,293
Net income per common share:
Basic	$	0.23	$	0.27
Diluted	$	0.23	$	0.27

For the three months ended March 31, 2019 and 2018 , the diluted weighted average number of common shares outstanding excluded an additional 0.4 million and 0.3 million shares issuable upon exercise of the Company’s stock options because the impact would be anti-dilutive .

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16. COMMITMENTS AND CONTINGENCIES

The Company is obligated under various non-cancelable operating leases for land, office space, equipment and site leases . In addition, the Company is obligated under various non-cancelable financing leases for vehicles. The annual minimum lease payments, including fixed rate escalations, as of March 31, 2019 are as follows (in thousands):



	Finance Leases		Operating Leases
The remainder of 2019	$	745	$	177,031
2020		706		237,124
2021		527		238,369
2022		311		239,272
2023		40		238,827
Thereafter		—		3,357,300
Total minimum lease payments		2,329		4,487,923
Less: amount representing interest		(130)		(1,978,543)
Present value of future payments		2,199		2,509,380
Less: current obligations		(957)		(227,819)
Long-term obligations	$	1,242	$	2,281,561

Tenant (Operating) Leases

The annual minimum tower lease income to be recei ved for tower space rental under non-cancelable operating leases, including fixed rate escalations, as of March 31, 2019 is as follows:



	(in thousands)
The remainder of 2019	$	1,191,719
2020		1,402,778
2021		1,155,058
2022		895,119
2023		680,367
Thereafter		1,938,806
Total	$	7,263,847

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a leading independent owner and operator of wireless communications infrastructure, including tower structures, rooftops and other structures that support antennas used for wireless communications, which we collectively refer to as “towers” or “sites.” Our principal operations are in the United States and its territories. In addition, we own and operate towers in South America, Central America, and Canada. Our primary business line is our site leasing business, which contributed 97.3% of our total segment operating profit for the three months ended March 31, 2019 . In our site leasing business, we (1) lease antenna space to wireless service providers on towers that we own or operate and (2) manage rooftop and tower sites for property owners under various contractual arrangements. As of March 31, 2019 , we owned 29,687 towers, a substantial portion of which have been built by us or built by other tower owners or operators who, like us, have built such towers to lease space to multiple wireless service providers. Our other business line is our site development business, through which we assist wireless service providers in developing and maintaining their own wireless service networks .

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Site Leasing

Our primary focus is the leasing of antenna space on our multi-tenant towers to a variety of wireless service providers under long-term lease contracts in the United States, Canada, Central America, and South America. As of March 31, 2019 , (1) no U.S. state or territory accounted for more than 10% of our total tower portfolio by tower count, and (2) no U.S. state or territory accounted for more than 10% of our total revenues for the three months ended March 31, 2019 . In addition, as of March 31, 2019 , approximately 28.8% of our total towers are located in Brazil and less than 3% of our total towers are located in any of our other international markets (each country is considered a market). We derive site leasing revenues primarily from wireless service provider tenants, including AT&T, Sprint, T-Mobile, Verizon Wireless, Oi S.A., Telefonica, Claro, and TIM. Wireless service providers enter into tenant leases with us, each of which relates to the lease or use of space at an individual site. In the United States and Canada, our tenant leases are generally for an initial term of five to ten years with multiple 5-year renewal periods at the option of the tenant. These tenant leases typically contain specific rent escalators, which average 3-4% per year, including the renewal option periods. Tenant leases in our Central American and South American markets typically have an initial term of ten years with multiple 5 -year renewal periods. In Central America, we have similar rent escalators to that of leases in the United States and Canada while our leases in South America escalate in accordance with a standard cost of living index. Site leases in South America typically provide for a fixed rental amount and a pass through charge for the underlying ground lease rent.

Cost of site leasing revenue primarily consists of:

Cash and non-cash r ental expense on ground leases and other underlying property interests;

Property taxes;

Site maintenance and monitoring costs (exclusive of employee related costs);

Utilities;

Property insurance; and

Lease o rigination cost amortization.

Gro und leases are generally for an initial term of five years or more with multiple 5-year renewal periods at our option and provide for rent escalators which typically average 2-3% annually, or in our South American markets, adjust in accordance with a standard cost of living index. As of March 31, 2019 , approximately 71% of our tower structures were located on parcels of land that we own, land subject to perpetual easements, or parcels of land in which we have a leasehold interest that extends beyond 20 years. For any given tower, costs are relatively fixed over a monthly or an annual time period. As such, operating costs for owned towers do not generally increase as a result of adding additional customers to the tower. The amount of property taxes varies from site to site depending on the taxing jurisdiction and the height and age of the tower. The ongoing maintenance requirements are typically minimal and include replacing lighting systems, painting a tower, or upgrading or repairing an access road or fencing.

In our Central American markets and Ecuador, significantly all of our revenue, expenses, and capital expenditures arising from our new build activities are denominated in U.S. dollars. Specifically, most of our ground leases, tenant leases, and tower-related expenses are paid in U.S. dollars. In our Central American markets and Ecuador, our local currency obligations are principally limited to (1) permitting and other local fees, (2) utilities, and (3) taxes. In Brazil, Canada, and Chile, significantly all of our revenue, expenses, and capital expenditures, including tenant leases, ground leases, and other tower-related expenses are denominated in local currency. In Colombia, Argentina , and Peru, our revenue, expenses, and capital expenditures, including tenant leases, ground leases, and other tower-related expenses are denominated in a mix of local currency and U.S. dollars.

As indicated in the table below, our site leasing business generates substantially all of our total segment operating profit. For information regarding our operating segments, see Not e 14 of our Condensed Notes to consolidated financial s tatements included in this quarterly report.



	For the three months ended
	March 31,

Segment operating profit as a percentage of total	2019		2018

Domestic site leasing		80.6%		80.7%
International site leasing		16.7%		17.8%
Total site leasing		97.3%		98.5%

We believe that the site leasing business continues to be attractive due to its long-term contracts, built-in rent escalators, high operating margins, and low customer churn (which refers to when a customer does not renew its lease or cancels its lease prior to the end of its term) other than in connection with customer consolidation or cessation of a particular technology. We believe that over the

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long-term, site leasing revenues will continue to grow as wireless service providers lease additional antenna space on our towers due to increasing minutes of network use and data transfer, network expansion and networ k coverage requirements. During 2019 , we expe ct organic site leasing revenue in both our domestic and international segments to increase over 2018 levels due in part to wireless carriers deploying unused spectrum. We believe our site leasing business is characterized by stable and long-term recurring revenues, predictable operating costs and minimal non-discretionary capital expenditures. Due to the relatively young age and mix of our tower portfolio, we expect future expenditures required to maintain these towers to be minimal. Consequently, we expect to grow our cash flows by (1) adding tenants to our towers at minimal incremental costs by using existing tower capacity or requiring wireless service providers to bear all or a portion of the cost of tower modifications and (2) executing monetary amendments as wireless service providers add or upgrade their equipment. Furthermore, because our towers are strategically positioned, we have historically experienced low tenant lease terminations as a percentage of revenue other than in connection with customer consolidation or cessations of a specific technology (e.g. MetroPCS, Leap, Clearwire, and iDEN ).

Site Development

Our site development business , which is conducted in the United States only, is complementary to our site leasing business and provides us the ability to keep in close contact with the wireless service providers who generate substantially all of our site leasing revenue and to capture ancillary revenues that are generated by our site leasing activities, such as antenna and equipment installation at our tower locat ions. Site development revenues are earned primarily from providing a full range of end to end services to wireless service providers or companies providing development or project management services to wireless service providers. Our services include: (1) network pre-design; (2) site audits; (3) identification of potential locations for towers and antennas on existing infrastructure; (4) support in leasing of the location; (5) assistance in obtaining zoning approvals and permits; (6) tower and related site construction; (7) antenna installation; and (8) radio equipment installation, commissioning, and maintenance. We provide site development services at our towers and at towers owned by others on a local basis, through regional, market, and project offices. The market offices are responsible for all site development operations.

Capital Allocation Strategy

Our capital allocation strategy is to prioritize investment in quality assets that meet our return criteria and then stock repurchases when we believe our stock price is below its intrinsic value. A primary goal of our capital allocation strategy is to increase our Adjusted Funds From Operations per share. To achieve this, we expect we would continue to deploy capital between portfolio growth and stock repurchases, subject to compliance with REIT distribution requirements, available funds and market conditions, while maintaining our target leverage levels. Key elements of our capital allocation strategy include:

Portfolio Growth. We intend to continue to grow our tower portfolio, domestically and internationally, through tower acquisitions and the construction of new towers that meet our internal return on invested capital criteria .

Stock Repurchase Program. We currently utilize stock repurchases as part of our capital allocation policy when we believe our share price is below its intrinsic value. We believe that share repurchases, when purchased at the right price, will facilitate our goal of increasing our Adjusted Funds From Operations per share.

Critical Accounting Policies and Estimates

We have identified the policies and significant estimation processes listed in the Annual Report on Form 10-K as critical to our business operations and the understanding of our results of operations. The listing is not intended to be a comprehensive list. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. In other cases, management is required to exercise judgment in the application of accounting principles with respect to particular transactions. The impact and any associated risks related to these policies on our business operations is discussed throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results. For a detailed discussion on the application of these and other accounti ng policies, see Note 2 of our consolidated financial s tatements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 . Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates and such differences could be significant.

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Lease Accounting

We adopted ASU No. 2016-02, Leases (“Topic 842”) using the modified retrospective adoption method with an effective date of January 1, 2019. This standard requires all lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. The adoption of the new lease standard had a significant impact on our Consolidated Balance Sheets but did not have a significant impact on our lease classification or a material impact on our Consolidated Statements of Operations and liquidity. Additionally, the adoption of Topic 842 did not have a material impact on our debt covenant compliance under our current agreements. We have elected to not separate nonlease components from the associated lease component for all underlying classes of assets.

In order to calculate our lease liability, we make certain assumptions related to lease term and discount rate. For lease ter ms, we evaluate renewal options . When available, we use the rate implicit in the lease to discount lease payments to present value. However, our ground leases generally do not provide a readily determinable im plicit rate. Therefore, we estimate the incremental borrowing rate to discount lease payments based on the lease term and lease currency . We use publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

RESULTS OF OPERATIONS

This report presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, a s well as by eliminating the impact of the remeasurement of our intercompany loans.

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

Revenues and Segment Operating Profit :



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

Revenues	(in thousands)
Domestic site leasing	$	362,838	$	341,707	$	—	$	21,131		6.2%
International site leasing		89,345		88,835		(9,449)		9,959		11.2%
Site development		41,110		27,760		—		13,350		48.1%
Total	$	493,293	$	458,302	$	(9,449)	$	44,440		9.7%
Cost of Revenues
Domestic site leasing	$	65,114	$	65,015	$	—	$	99		0.2%
International site leasing		27,600		27,802		(3,175)		2,973		10.7%
Site development		31,101		22,520		—		8,581		38.1%
Total	$	123,815	$	115,337	$	(3,175)	$	11,653		10.1%
Operating Profit
Domestic site leasing	$	297,724	$	276,692	$	—	$	21,032		7.6%
International site leasing		61,745		61,033		(6,274)		6,986		11.4%
Site development		10,009		5,240		—		4,769		91.0%

Revenues

Domestic site leasing revenues increase d $21.1 million for the three months ended March 31, 2019 , as compared to the prior year, primarily due to (1 ) revenues from 319 towers acquired and 37 towers built since January 1, 2018 and ( 2 ) organic site leasing

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growth, primarily from monetary lease amendments for additional equipment added to our towers as well as new leases and contractual rent escalators, partially offset by lease non-renewals primarily by MetroPCS, Leap, Clearwire, and iDEN .

Inte rnational site leasing revenues increase d $0.5 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, international site leasing revenues increase d $10.0 million. These changes were primarily due to ( 1 ) revenues from 1,051 towers acquired and 448 towers built since January 1, 2018 and (2 ) organic site leasing growth from new leases, amendments, and contractual escalators . Site leasing revenue in Brazil represented 12.4% of total site leasing revenue for the period. No other individual international market represented more than 3% of our total site leasing revenue.

Site development revenues increase d $ 13.4 million for the three months ended March 31, 2019 , as compared to prior year, as a result of increase d carrier activity primarily driven by network expansion by Sprint and T-Mobile .

Operating Profit

Domestic site leasing segment operating profit increase d $21.0 million for the three months ended March 31, 2019 , as compared to the prior year, primarily due to additional profit generated by ( 1 ) towers acquired and built since January 1, 2018 and organic site leasing growth as noted above, ( 2 ) continued control of our site leasing cost of revenue, and ( 3 ) the positive impact of our ground lease purchase program.

International site leasing segment operating profit increase d $0.7 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, international site leasing segment operating profit increased $7.0 million. These changes were primarily due to additional profit generated by ( 1 ) towers acquired and built since January 1, 2018 and organic site leasing growth as noted above , ( 2 ) continued control of our site leasing cost of revenue, and ( 3 ) the positive impact of our ground lease purchase program.

Site development segment operating profit increase d $4.8 million for the three months ended March 31, 2019 , as compared to the prior year, primarily due to an increase in revenue from increased carrier activity primarily driven by network expansion by Sprint and T-Mobile as well as a change in the mix of work performed.

Selling, General, and Administrative Expenses:



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Domestic site leasing	$	28,893	$	19,339	$	—	$	9,554		49.4%
International site leasing		5,688		6,614		(297)		(629)		(9.5%)
Total site leasing	$	34,581	$	25,953	$	(297)	$	8,925		34.4%
Site development		5,706		4,077		—		1,629		40.0%
Not identified by segment		10,672		6,019		—		4,653		77.3%
Total	$	50,959	$	36,049	$	(297)	$	15,207		42.2%

Selling, general, and administrative expenses increase d $14.9 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, selling, general, and administrative expenses increase d $15.2 million. These changes were primarily as a result of increase s in noncash compensation resulting from the adoption of the retirement plan as well as personnel, compensation , benefits, and other support-related costs , partially offset by a decrease in the provision for doubtful accounts due to a $2.3 million partial recovery of the Oi reserve in the first quarter of 2019 .

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Acquisition and New Business Initiatives Related Adjustments and Expenses:



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Domestic site leasing	$	708	$	1,786	$	—	$	(1,078)		(60.4%)
International site leasing		1,729		1,258		(164)		635		50.5%
Total	$	2,437	$	3,044	$	(164)	$	(443)		(14.6%)

Acquisition and new business initiatives related adjustments and expenses decrease d $0.6 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, acquisition and new business initiatives related adjustments and expenses decrease d $0.4 million. These changes were primarily as a result of a decrease in third party acquisition and integration related costs compared to the prior year .

Asset Impairment and Decommission Costs:



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Domestic site leasing	$	3,634	$	6,726	$	—	$	(3,092)		(46.0%)
International site leasing		2,137		1,502		(122)		757		50.4%
Total site leasing	$	5,771	$	8,228	$	(122)	$	(2,335)		(28.4%)
Site development		—		278		—		(278)		(100.0%)
Total	$	5,771	$	8,506	$	(122)	$	(2,613)		(30.7%)

A sset impairment and decommission costs decreased $2.7 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, asset impairment and decommission costs decreased $2.6 million. This change was primarily as a result of a $2.6 million decrease in impairment charges resulting from our regular analysis of whether the future cash flows from certain towers are adequate to recover the carrying value of the investment in those towers and a $0.2 million decrease in the impairment charge recor ded on decommissioned towers .

Depreciation, Accr etion, and Amortization Expense :



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Domestic site leasing	$	130,244	$	123,458	$	—	$	6,786		5.5%
International site leasing		38,795		39,680		(4,094)		3,209		8.1%
Total site leasing	$	169,039	$	163,138	$	(4,094)	$	9,995		6.1%
Site development		562		642		—		(80)		(12.5%)
Not identified by segment		1,437		1,618		—		(181)		(11.2%)
Total	$	171,038	$	165,398	$	(4,094)	$	9,734		5.9%

Depreciation, accretion, and amortization expense increased $5.6 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, depreciation, accretion, and amortization expense increased $9.7 million.

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These changes were primarily due to an increase in the number of towers we acquired and built since January 1, 2018 , partially offset by the impact of assets that became fully depreciated since the prior year period.

Operating Income (Expense):



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Domestic site leasing	$	134,245	$	125,383	$	—	$	8,862		7.1%
International site leasing		13,396		11,979		(1,597)		3,014		25.2%
Total site leasing	$	147,641	$	137,362	$	(1,597)	$	11,876		8.6%
Site development		3,741		243		—		3,498		1,439.5%
Not identified by segment		(12,109)		(7,637)		—		(4,472)		58.6%
Total	$	139,273	$	129,968	$	(1,597)	$	10,902		8.4%

Domestic site leasing operating income increase d $8.9 million for the three months ended March 31, 2019 , as compared to the prior year, primarily due to higher segment operating profit and a decrease in asset impairment and decommission costs and acquisition and new business initiatives related adjustments and expenses , partially offset by increases in selling, general, and administrative expenses and depreciation, accr etion, and amortization expense .

International site leasing operating income increased $1.4 million for the three months ended March 31, 2019 , as compared to the prior year . On a constant currency basis, international site leasing operating income increased $3.0 million. These changes were primarily due to higher segment operating profit, partially offset by increases in depreciation, accretion, and amortization expenses and acquisition and new business initiatives related adjustments and expenses .

Site development operating income increase d $3.5 million for the three months ended March 31, 2019 , as compared to the prior year, primarily due to higher segment operating profit , partially offset by increases in selling, general, and administrative expenses .

Other Income (Expense):



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Interest income	$	1,800	$	1,295	$	(106)	$	611		47.2%
Interest expense		(98,667)		(88,923)		(5)		(9,739)		11.0%
Non-cash interest expense		(641)		(733)		—		92		(12.6%)
Amortization of deferred financing fees		(5,061)		(5,388)		—		327		(6.1%)
Loss from extinguishment of debt, net		—		(645)		—		645		(100.0%)
Other (expense) income, net		(508)		4,553		(3,834)		(1,227)		(41.9%)
Total	$	(103,077)	$	(89,841)	$	(3,945)	$	(9,291)		10.2%

Interest expense increase d $9.7 million for the three months ended March 31, 2019 , as compared to the prior year. These changes were due to a higher weighted average interest rate and higher average principal amount of cash -interest bearing debt outstanding as compared to the prior year.

Other (expense) inco me, net includes a $2.1 million loss on the remeasurement of U.S. dollar denominated intercompany loans with a Brazilian subsidiary for the three months ended March 31, 2019 , while t he prior year period included a $1.6 million gain .

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Provision for Income Taxes :



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Provision for income taxes	$	(10,207)	$	(8,582)	$	1,516	$	(3,141)		36.6%

Provision for income taxes increased $1.6 million for the three months ended March 31, 2019 , as compared to the prior year. On a constant currency basis, provision for income taxes increased $3.1 million. These changes were primarily due to a $ 1.8 million increase in Brazilian d eferred tax provision and a $ 1 .1 million accrual for deferred withholding taxes on foreign earnings .

Net Income:



	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Net income	$	25,989	$	31,545	$	(4,026)	$	(1,530)		(5.1%)

Net income decreased $5.6 million for the three months ended March 31, 2019 , as compared to the prior year. This change was primarily due to increase s in the provision for income taxes and interest expense and fluctuations in foreign currency exchange rates including changes recorded on the remeasurement of the U.S. dollar denominated intercompany loans with a Brazilian s ubsidiary (net of the tax impact ) , partially offset by an increase in operating income.

NON-GAAP FINANCIAL MEASURES

This report contains information regarding a non-GAAP measure, Adjusted EBITDA. We have provided below a description of Adjusted EBITDA, a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure and an explanation as to why management utilizes this measure. This report also presents our financial results and other financial metrics after eliminating the impact of changes in foreign currency exchange rates. We believe that providing these financial results and metrics on a constant currency basis, which are non-GAAP measures, gives management and investors the ability to evaluate the performance of our business without the impact of foreign currency exchange rate fluctuations. We eliminate the impact of changes in foreign currency exchange rates by dividing the current period’s financial results by the average monthly exchange rates of the prior year period, a s well as by eliminating the impact of the remeasurement of our intercompany loans.

Adjusted EBITDA

We define Adjusted EBITDA as net income excluding the impact of non-cash straight-line leasing revenue, non-cash straight-line ground lease expense, non-cash compensation, net loss from extinguishment of debt, other income and expenses, acquisition and new business initiatives related adjustments and expenses, asset impairment and decommission costs, interest income, interest expenses, depreciation, accretion, and amortization, and provision for or benefit from taxes.

We believe that Adjusted EBITDA is useful to investors or other interested parties in evaluating our financial performance. Adjusted EBITDA is the primary measure used by management (1) to evaluate the economic productivity of our operations and (2) for purposes of making decisions about allocating resources to, and assessing the performance of, our operations. Management believes that Adjusted EBITDA helps investors or other interested parties to meaningfully evaluate and compare the results of our operations (1) from period to period and (2) to our competitors, by excluding the impact of our capital structure (primarily interest charges from our outstanding debt) and asset base (primarily depreciation, amortization and accretion) from our financial results. Management also believes Adjusted EBITDA is frequently used by investors or other interested parties in the evaluation of REITs. In addition, Adjusted EBITDA is a component of the calculation that has been used by our lenders to determine compliance with certain covenants under our Senior Credit Agreement and the indentures relating to the 2014 Senior Notes, 2016 Senior Notes, and 2017 Senior Notes. Adjusted EBITDA should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

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	For the three months ended								Constant
	March 31,				Foreign		Constant		Currency
	2019		2018		Currency Impact		Currency Change		% Change

	(in thousands)
Net income	$	25,989	$	31,545	$	(4,026)	$	(1,530)		(5.1%)
Non-cash straight-line leasing revenue		(2,645)		(5,468)		158		2,665		(48.7%)
Non-cash straight-line ground lease expense		6,089		6,778		(4)		(685)		(10.1%)
Non-cash compensation		23,414		10,410		(170)		13,174		126.6%
Loss from extinguishment of debt, net		—		645		—		(645)		(100.0%)
Other expense (income), net		508		(4,553)		3,834		1,227		41.9%
Acquisition and new business initiatives
related adjustments and expenses		2,437		3,044		(164)		(443)		(14.6%)
Asset impairment and decommission costs		5,771		8,506		(122)		(2,613)		(30.7%)
Interest income		(1,800)		(1,295)		106		(611)		47.2%
Interest expense (1)		104,369		95,044		5		9,320		9.8%
Depreciation, accretion, and amortization		171,038		165,398		(4,094)		9,734		5.9%
Provision for income taxes (2)		10,404		8,775		(1,517)		3,146		35.9%
Adjusted EBITDA	$	345,574	$	318,829	$	(5,994)	$	32,739		10.3%

(1)

Interest expense includes interest expense, non-cash interest expense, and amortization of deferred financing fees.

(2)

Provision for taxes includes $197 and $193 of franchise taxes for the three months ended March 31, 2019 and 2018 , respectively , reflected in selling, general, and administrative expenses on the Consolidated Statement s of Operations.

Adjusted EBITDA increase d $26.7 million for the three months ended March 31, 2019 , as compared to the prior year period. On a constant currency basis, A djusted EBITDA increase d $32.7 million. These changes were pri marily due to higher segment operating profi t.

LIQUIDITY AND CAPITAL RESOURCES

SBAC is a holding company with no business operations of its own. SBAC’s only significant asset is 100% of the outstanding capital stock of SBA Telecommunications, LLC (“Telecommunications”), which is also a holding company that owns equity interests in entities that directly or indirectly own all of our domestic and international towers and assets. We conduct all of our business operations through Telecommunications’ subsidiaries. Accordingly, our only source of cash to pay our obligations, other than financings, is distributions with respect to our ownership interest in our subsidiaries from the net earnings and cash flow generated by these subsidiaries.

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A summary of our cash flows is as follows:



	For the three months ended
	March 31, 2019		March 31, 2018

	(in thousands)
Cash provided by operating activities	$	222,665	$	178,577
Cash used in investing activities		(84,976)		(151,597)
Cash (used in) provided by financing activities		(158,047)		34,049
Change in cash, cash equivalents, and restricted cash		(20,358)		61,029
Effect of exchange rate changes on cash, cash equiv., and restricted cash		(14,071)		(504)
Cash, cash equivalents, and restricted cash, beginning of period		178,300		104,295
Cash, cash equivalents, and restricted cash, end of period	$	143,871	$	164,820

Operating Activities

Cash provided by operating activities was $222.7 million for t he three months ended March 31, 2019 as compared to $178.6 million for the three months ended March 31, 2018 . The increase was primarily due to an increase in segment operating profit and a decrease in cash outflows associated with working capital changes , partially offset by an increase in selling, general, and administrative expenses and cash interest payments .

Investing Activities

A detail of our cash capital expenditures is as follows:



	For the three months ended March 31,
	2019		2018

	(in thousands)
Acquisitions of towers and related intangible assets	$	42,148	$	108,355
Construction and related costs on new builds		15,426		13,271
Augmentation and tower upgrades		13,703		10,345
Land buyouts and other assets (1)		13,139		9,267
Tower maintenance		6,420		6,664
General corporate		825		816
Total cash capital expenditures	$	91,661	$	148,718

(1)

Excludes $3.8 million and $6.6 million spent to extend ground lease term s for the three months ended March 31, 2019 and 2018 , respectively.

For 2019 , we expect to incur non-discretionary cash capital expenditures associated with tower maintenance and general corporate expenditures of $31.0 million to $41.0 million and discretionary cash capital expenditures, based on current or potential acquisition obligations, planned new tower construction, forecasted tower augmentations, and forecasted ground lease purchases, of $325.0 million to $345.0 million. We expect to fund these cash capital expenditures from cash on hand, cash flow from operations, and borrowings under the Revolving Credit Facility or new financings. The exact amount of our future cash capital expenditures will depend on a number of factors, including amounts necessary to support our tower portfolio, our new tower build and acquisition programs, and our ground lease purchase program.

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Financing Activities

A detail of our financing activities is as follows:



	For the year ended
	March 31, 2019		March 31, 2018

	(in thousands)
Net (repayments) borrowings under Revolving Credit Facility (1)	$	(215,000)	$	195,000
Repayment of Tower Securities (1)		—		(755,000)
Proceeds from issuance of Tower Securities, net of fees (1)		—		631,848
Repurchase and retirement of common stock (2)		—		(38,545)
Proceeds from employee stock purchase/stock option plans		63,475		6,901
Other financing activities		(6,522)		(6,155)
Net cash (used in) provided by financing activities	$	(158,047)	$	34,049

(1)

For additional information regarding our debt offerings, refer to the Debt Instruments and Debt Service Requirements below.

(2)

As of the date of this filing, we had $204.5 million of authorization remaining under the current stock repurchase plan. During the three months ended March 31, 2018, we repurchased 0.2 million shares of our Class A common stock under our current stock repurchase plan for $38.5 million at a weighted average price per share of $161.60. S hares repurchased were retired.

Registration Statements

We have on file with the Commission a shelf registration statement on Form S-4 registering shares of Class A common stock that we may issue in connection with the acquisition of wireless communication towers or antenna sites and related assets or companies who own wireless communication towers, antenna sites, or related assets. During the three months ended March 31, 2019 , we issue d 10,000 shares of Class A common stock under this registration statement. As of March 31, 2019 , we had approximately 1.2 million shares of Class A common stock remaining under thi s shelf registration statement.

On March 5, 2018, we filed with the Commission an automatic shelf registration statement for well-known seasoned issuers on Form S-3ASR. This registration statement enables us to issue shares of our Class A common stock, preferred stock or debt securities either separately or represented by warrants, or depositary shares as well as units that include any of these securities. Under the rules governing automatic shelf registration statements, we will file a prospectus supplement and advise the Commission of the amount and type of securities each time we issue securities under this registration statement. No securities were issued under this registration statement through the date of this filing.

Debt Instruments and Debt Service Requirements

Revolving Credit Facility under the Senior Credit Agreement

T he Revolving Credit Facility consists of a revolving loan under which up to $1.25 billion aggregate principal amount may be borrowed, repaid and redrawn, based upon specific financial ratios and subject to the satisfaction of other customary conditions to borrowing. Amounts borrowed under the Revolving Credit Facility accrue interest, at SBA Senior Finance II’s election, at either ( 1 ) the Eurodollar Rate plus a margin that ranges from 112.5 basis points to 175.0 basis points or ( 2 ) the Base Rate plus a margin that ranges from 12.5 basis points to 75.0 basis points, in each case based on the ratio of Consolidated Net Debt to Annualized Borrower EBITDA, calculated in accordance with the Senior Credit Agreement. In addition, SBA Senior Finance II is required to pay a commitment fee of between 0.20% and 0.25% per annum on the amount of unused commitment. If not earlier terminated by SBA Senior Finance II, the Revolving Credit Facility will terminate on, and SBA Senior Finance II will repay all amounts outstanding on or before, April 11, 2023. The proceeds available under the Revolving Credit Facility may be used for general corporate purposes. SBA Senior Finance II may, from time to time, borrow from and repay the Revolving Credit Facility. Consequently, the amount outstanding under the Revolving Credit Facility at the end of the period may not be reflective of the total amounts outstanding during such period.

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During the three months ended March 31, 2019 , we repaid $215.0 million of the outstanding balance under the Revolving Credit Facility. As of March 31, 2019 , the balance outstanding under the Revolving Credit Facility was $110.0 million accruing interest at 4.16% per annum. In addition, SBA Senior Finance II was required to pay a commitment fee of 0.25% per annum on the amount of the unused commitment. As of March 31, 2019 , SBA Senior Finance II was in compliance with the financial covenants contained in the Senior Credit Agreement.

Subsequent to March 31, 2019 , we repaid $60.0 million of the outstanding balance under the Revolving Credit Facility. As of the date of this filing, $50.0 million was outstanding under the Revolving Credit Facility.

Term Loans un der the Senior Credit Agreement

2018 Term Loan

On April 11, 2018, we, through our wholly owned subsidiary, SBA Senior Finance II LLC, obtained a new term loan (the “2018 Term Loan”) under the amended and restated Senior Credit Agreement. The 2018 Term Loan consists of a senior secured term loan with an initial aggregate principal amount of $2.4 billion that matures on April 11, 2025. The 2018 Term Loan accrues interest, at SBA Senior Finance II’s election at either the Base Rate plus 100 basis points (with a zero Base Rate floor) or the Eurodollar Rate plus 200 basis points (with a zero Eurodollar Rate floor). The 2018 Term Loan was issued at 99.75% of par value. As of March 31, 2019 , the 2018 Term Loan was accruing interest at 4.50% per annum. Principal payments on the 2018 Term Loan commenced on September 30, 2018 and are being made in quarterly installments on the last day of each March, June, September, and December in an amount equal to $6.0 million. We incurred financing fees of approximately $16.8 million in relation to this transaction, which are being amortized through the maturity date. The proceeds from the 2018 Term Loan were used (1) to retire the outstanding $1.93 billion in aggregate principal amount of the 2014 Term Loan and 2015 Term Loan, (2) to pay down the existing outstanding balance under the Revolving Credit Facility, and (3) for general corporate purposes.

During the three months ended March 31, 2019 , we repaid an aggregate of $6.0 million of principal on the 2018 Term Loan. As of September 30, 2018, the 2018 Term Loan had a principal balance of $2.4 billion.

On February 1, 2019, we, through our wholly owned subsidiary, SBA Senior Finance II, LLC, entered into a four-year interest rate swap with JP Morgan on a portion of our 2018 Term Loan in order to reduce our exposure to fluctuations in interest rates . The interest rate swap has a $1.2 billion notional value receiv ing interest at one month LIBOR plus 200 basis points and paying a fixed rate of 4.495% per annum settled monthly .

Secured Tower Revenue Securities

2013 -2C Tower Securities

On April 18, 2013, we, through a New York common law trust (the “Trust”), issued $575.0 million of 3.722% Secured Tower Revenue Securities Series 2013-2C, which have an anticipated repayment date of April 11, 2023 and a final maturity date of April 9, 2048 ( the “2013-2C Tower Securities”) . We incurred financing fees of $11.0 million in relation to this transaction, which were being amortized through the anticipated repayment date of eac h of the 2013 Tower Securities.

The sole asset of the Trust consists of a non-recourse mortgage loan made in favor of those entities that are borrowers on the mortgage loan (the “Borrowers”).

2014 Tower Securities

On October 15, 2014, we, through the Trust, issued $920.0 million of 2.898% Secured Tower Revenue Securities Series 2014-1C, which have an anticipated repayment date of October 8, 2019 and a final maturity date of October 11, 2044 (the “2014-1C Tower Securities”) and $620.0 million of 3.869% Secured Tower Revenue Securities Series 2014-2C, which have an anticipated repayment date of October 8, 2024 and a final maturity date of October 8, 2049 (the “2014-2C Tower Securities”) (collectively the “2014 Tower Securities”). The aggregate $1.54 billion of 2014 Tower Securities have a blended interest rate of 3.289% per annum, payable monthly. We incurred financing fees of $22.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of each of the 2014 Tower Securities.

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2015-1C Tower Securities

On October 14, 2015, we, through the Trust, issued $500.0 million of Secured Tower Revenue Securities Series 2015-1C, which have an anticipated repayment date of October 8, 2020 and a final maturity date of October 10, 2045 (the “2015-1C Tower Securities”). The fixed interest rate of the 2015-1C Tower Securities is 3.156% per annum, payable monthly. We incurred financing fees of $11.2 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2015-1C Tower Securities.

2016-1C Tower Securities

On July 7, 2016, we, through the Trust, issued $700.0 million of Secured Tower Revenue Securities Series 2016-1C, which have an anticipated repayment date of July 9, 2021 and a final maturity date of July 10, 2046 (the “2016-1C Tower Securities”). The fixed interest rate of the 2016-1C Tower Securities is 2.877% per annum, payable monthly. We incurred financing fees of $9.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2016-1C Tower Securities.

2017-1C Tower Securities

On April 17, 2017, we, through the Trust, issued $760.0 million of Secured Tower Revenue Securities Series 2017-1C, which have an anticipated repayment date of April 11, 2022 and a final maturity date of April 9, 2047 (the “2017-1C Tower Securities”). The fixed interest rate on the 2017-1C Tower Securities is 3.168% per annum, payable monthly. Net proceeds from this offering were used to prepay the entire $610.0 million aggregate principal amount, as well as accrued and unpaid interest, of the 2012-1C Tower Securities and for general corporate purposes. We incurred financing fees of $10.2 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2017-1C Tower Securities.

In addition, to satisfy certain risk retention requirements of Regulation RR promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) , SBA Guarantor, LLC, a wholly owned subsidiary, purchased $40.0 million of Secured Tower Revenue Securities Series 2017-1R issued by the Trust, which have an anticipated repayment date of April 11, 2022 and a final maturity date of April 9, 2047 (the “2017-1R Tower Securities”). The fixed interest rate on the 2017-1R Tower Securities is 4.459% per annum, payable monthly. Principal and interest payments made on the 2017-1R Tower Securit ies eliminate in consolidation.

2018-1C Tower Securities

On March 9, 2018, we, through the Trust, issued $640.0 million of Secured Tower Revenue Securities Series 2018-1C, which have an anticipated repayment date of March 9, 2023 and a final maturity date of March 9, 2048 (the “2018-1C Tower Securities”). The fixed interest rate on the 2018-1C Tower Securities is 3.448% per annum, payable monthly. Net proceeds from this offering, in combination with borrowings under the Revolving Credit Facility, were used to repay the entire aggregate principal amount of the 2013-1C Tower Securities ($425.0 million) and 2013-1D Tower Securities ($330.0 million), as well as accrued and unpaid interest. We incurred financing fees of $8.5 million in relation to this transaction, which are being amortized through the anticipated repayment date of the 2018-1C Tower Securities.

Debt Covenants

As of March 31, 2019 , the Borrowers met the debt service coverage ratio required by the mortgage loan agreement and were in compliance with all other covenants as set forth in the agreement.

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Senior Notes

2014 Senior Notes

On July 1, 2014, we issued $750.0 million of unsecured senior notes due July 15, 2022 (the “2014 Senior Notes”). The 2014 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2014 Senior Notes is due semi-annually on January 15 and July 15 of each year. We incurred financing fees of $11.6 million in relation to this transaction, which are being amortized through the maturity date.

The 2014 Senior Notes are subject to redemption in whole or in part at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. We may redeem the 2014 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: July 15, 2019 at 101.219% or July 15, 2020 until maturity at 100.000% of the principal amount of the 2014 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

2016 Senior Notes

On August 15, 2016, we issued $1.1 billion of unsecured senior notes due September 1, 2024 (the “2016 Senior Notes”). The 2016 Senior Notes accrue interest at a rate of 4.875% per annum and were issued at 99.178% of par value. Interest on the 2016 Senior Notes is due semi-annually on March 1 and September 1 of each year, beginning on March 1, 2017. We incurred financing fees of $12.8 million in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering and cash on hand were used to redeem $800.0 million, the aggregate principal amount outstanding, of Telecommunications’ 5.75% Senior Notes and $250.0 million of our 5.625% Senior Notes and pay the associated call premiums.

The 2016 Senior Notes are subject to redemption in whole or in part on or after September 1, 2019 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to September 1, 2019, w e may at our option redeem up to 35% of the aggregate principal amount of the 2016 Senior Notes originally issued at a redemption price of 104.875% of the principal amount of the 2016 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. We may redeem the 2016 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: September 1, 2019 at 103.656%, September 1, 2020 at 102.438%, September 1, 2021 at 101.219%, or September 1, 2022 until maturity at 100.000%, of the principal amount of the 2016 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

2017 Senior Notes

On October 13, 2017, we issued $750.0 million of unsecured senior notes due October 1, 2022 (the “2017 Senior Notes”). The 2017 Senior Notes accrue interest at a rate of 4.0% per annum. Interest on the 2017 Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning on April 1, 2018. We incurred financing fees of $8.9 million in relation to this transaction, which are being amortized through the maturity date. Net proceeds from this offering were used to repay $460 .0 million outstanding under the Revolving Credit Facility and for general corporate purposes.

The 2017 Senior Notes are subject to redemption in whole or in part on or after October 1, 2019 at the redemption prices set forth in the indenture agreement plus accrued and unpaid interest. Prior to October 1, 2020, we may, at our option, redeem up to 35% of the aggregate principal amount of the 2017 Senior Notes originally issued at a redemption price of 104.000% of the principal amount of the 2017 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. We may redeem the 2017 Senior Notes during the twelve-month period beginning on the following dates at the following redemption prices: October 1, 2019 at 102.000%, October 1, 2020 at 101.000%, or October 1, 2021 until maturity at 100.000%, of the principal amount of the 2017 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

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Debt Service

As of March 31, 2019 , we believe that our cash on hand, capacity available under our Revolving Credit Facility and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months.

The following table illustrates our estimate of our debt service requirement over the twelve months ended March 31, 2020 based on the amounts outstanding as of March 31, 2019 and the interest rates accruing on those amounts on such date (in thousands):



2014 Senior Notes	$	36,563
2016 Senior Notes		53,625
2017 Senior Notes		30,000
2013-2C Tower Securities		21,585
2014-1C Tower Securities (1)		934,523
2014-2C Tower Securities		24,185
2015-1C Tower Securities		15,939
2016-1C Tower Securities		20,361
2017-1C Tower Securities		24,318
2018-1C Tower Securities		22,270
Revolving Credit Facility		7,426
2018 Term Loan		130,928
Total debt service for the next 12 months	$	1,321,723

(1)

The anticipated repayment date and the final maturity date for the 2014-1C Tower Securities is October 8, 2019 and October 11, 2044, respectively. Interest expense included above is through the anticipated repayment date.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks that are inherent in our financial instruments. These instruments arise from transactions entered into in the normal course of business.

The following table presents the future principal payment obligations and fair values associated with our long-term debt instruments assuming our actual level of long-term indebtedness as of March 31, 2019 :



	2019		2020		2021		2022		2023		Thereafter		Total		Fair Value

	(in thousands)
2014 Senior Notes	$	—	$	—	$	—	$	750,000	$	—	$	—	$	750,000	$	761,250
2016 Senior Notes		—		—		—		—		—		1,100,000		1,100,000		1,108,250
2017 Senior Notes		—		—		—		750,000		—		—		750,000		751,875
2013-2C Tower Securities (1)		—		—		—		—		575,000		—		575,000		572,591
2014-1C Tower Securities (1)		920,000		—		—		—		—		—		920,000		916,348
2014-2C Tower Securities (1)		—		—		—		—		—		620,000		620,000		630,112
2015-1C Tower Securities (1)		—		500,000		—		—		—		—		500,000		498,850
2016-1C Tower Securities (1)		—		—		700,000		—		—		—		700,000		693,714
2017-1C Tower Securities (1)		—		—		—		760,000		—		—		760,000		752,856
2018-1C Tower Securities (1)		—		—		—		—		640,000		—		640,000		644,922
Revolving Credit Facility		—		—		—		—		110,000		—		110,000		110,000
2018 Term Loan		18,000		24,000		24,000		24,000		24,000		2,268,000		2,382,000		2,340,315
Total debt obligation	$	938,000	$	524,000	$	724,000	$	2,284,000	$	1,349,000	$	3,988,000	$	9,807,000	$	9,781,083

(1)

The anticipated repayment date and the final maturity date for the 2013-2C Tower Securities is April 11, 2023 and April 9, 2048, respectively.

The anticipated repayment date and the final maturity date for the 2014-1C Tower Securities is October 8, 2019 and October 11, 2044, respectively.

The anticipated repayment date and the final maturity date for the 2014-2C Tower Securities is October 8, 2024 and October 8, 2049, respectively.

The anticipated repayment date and the final maturity date for the 2015-1C Tower Securities is October 8, 2020 and October 10, 2045, respectively.

The anticipated repayment date and the final maturity date for the 2016-1C Tower Securities is July 9, 2021 and July 10, 2046, respectively.

The anticipated repayment date and the final maturity date for the 2017-1C Tower Securities is April 11, 2022 and April 9, 2047, respectively.

The anticipated repayment date and the final maturity date for the 2018-1C Tower Securities is March 9, 2023 and March 9, 2048, respectively.

Our current primary market risk exposure is (1) interest rate risk relating to our ability to refinance our debt at commercially reasonable rates, if at all, and (2) interest rate risk relating to the impact of interest rate movements on the variable portion of our 2018 Term Loan and any borrowings that we may incur under our Revolving Credit Facility, which are at floating rates. We manage the interest rate risk on our outstanding debt through our large percentage of fixed rate debt , including a four-year interest rate swap on a portion of our 2018 Term Loan entered into on February 1, 2019. The interest rate swap has a $1.2 billion notional value receiving interest at one month LIBOR plus 200 basis points and paying a fixed rate of 4.495% per annum settled monthly . While we cannot predict our ability to refinance existing debt or the impact interest rate movements will have on our existing debt, we continue to evaluate our financial position on an ongoing basis.

We are exposed to market risk from changes in foreign currency exchange rates in connection with our operations in Brazil, Canada, Chile, Peru, Argentina, Colombia, and to a lesser extent, our markets in Central America. In each of these countries, we pay most of our selling, general, and administrative expenses and a portion of our operating expenses, such as taxes and utilities incurred in the country in local currency. In addition, in Brazil, Canada, and Chile , we receive significantly all of our revenue and pay

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significantly all of our operating expenses in local currency. In Colombia, Argentina , and Peru , we receive our revenue and pay our operating expenses in a mix of local currency and U.S. dollars. All transactions denominated in currencies other than the U.S. Dollar are reported in U.S. Dollars at the applicable exchange rate. All assets and liabilities are translated into U.S. Dollars at exchange rates in effect at the end of the applicable fiscal reporting period, and all revenues and expenses are translated at average rates for the period. The cumulative translation effect is included in equity as a component of Accumulated other comprehensive income (loss). For the three months ended March 31, 2019 , approximately 12.9% of our revenues and approximately 15.5% of our total operating expenses were denominated in foreign currencies.

We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in the Brazilian Real from the quoted foreign currency exchange rates at March 31, 2019 . As of March 31, 2019 , the analysis indicated that such an adverse movement would have caused our revenues and operating income to decline by approximately 1.0% and 0.7% , respectively, for the three months ended March 31, 2019 .

As of March 31, 2019 , we had intercompany debt, which is denominated in a currency other than the functional currency of the subsidiary in which it is recorded. As settlement of this debt is anticipated or planned in the foreseeable future, any changes in the foreign currency exchange rates will result in unrealized gains or losses, which will be included in our determination of net income. A change of 10% in the underlying exchange rates of our unsettled intercompany debt at March 31, 2019 would have resulted in approximately $48.2 million of unrealized gains or losses that would have been included in Other income (expense), net in our Consolidated Statements of Operations for the three months ended March 31, 2019 .

Special Note Regarding Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:

our expectations on the future growth and financial health of the wireless industry and the industry participants, the drivers of such growth, the demand for our towers, the future capital investments of our customers, the trends developing in our industry, and competitive factors;

our ability to capture and capitalize on industry growth and the impact of such growth on our financial and operational results;

our intent to grow our tower portfolio domestically and internationally and expand through acquisitions, new builds, and organic lease up on existing towers;

our belief that over the long-term, site leasing revenues will continue to grow as wireless service providers increase their use of our towers due to increasing minutes of network use and data transfer, network expansion and network coverage requirements;

our expectation regarding site leasing revenue growth, on an organic basis, in our domestic and international segments , and the drivers of such growth ;

our focus on our site leasing business and belief that our site leasing business is characterized by stable and long-term recurring revenues, reduced exposure to changes in customer spending, predictable operating costs, and minimal non-discretionary capital expenditures;

our expectation that, due to the relatively young age and mix of our tower portfolio, future expenditures required to maintain these towers will be minimal;

our expectation that we will grow our cash flows by adding tenants to our towers at minimal incremental costs and executing monetary amendments;

our expectations regarding churn rates;

our election to be subject to tax as a REIT and our intent to continue to operate as a REIT ;

our belief that our business is currently operated in a manner that complies with the REIT rules and our intent to continue to do so;

our plans regarding our distribution policy, and the amount and timing of, and source of funds for, any such distributions;

our expectations regarding the use of NOLs to reduce REIT taxable income;

our expectations regarding our capital allocation strategy, including future allocation decisions between the stock repurchases portfolio growth , the impact of our election to be taxed as a REIT on that strategy, and our goal of increasing our Adjusted Funds From Operations per share;

our expectations regarding our future cash capital expenditures, both discretionary and non-discretionary, including expenditures required for new builds and to maintain, improve, and modify our towers, ground lease purchases, and general corporate expenditures, and the source of funds for these expenditures;

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our expectations regarding our business strategies, including our strategy for securing rights to the land underlying our towers, and the impact of such strategies on our financial and operational results;

our intended use of our liquidity;

our intent to maintain our target leverage levels;

our expectations regarding our debt service in 2019 and our belief that our cash on hand, capacity under our Revolving Credit Facility, and our cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months; and

our expectations and estimates regarding certain tax and accounting matters, including the impact on our financial statements.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

the impact of consolidation among wireless service providers, including the potential impact of the proposed merger between Sprint and T-Mobile if consummated, on our leasing revenue;

our ability to continue to comply with covenants and the terms of our credit instruments and our ability to obtain additional financing to fund our capital expenditures;

our ability to successfully manage the risks associated with international operations, including risks relating to political or economic conditions, inflation, tax laws, currency restrictions and exchange rate fluctuations, legal or judicial systems, and land ownership;

our ability to successfully manage the risks associated with our acquisition initiatives, including our ability to effectively integrate acquired towers into our business and to achieve the financial results projected in our valuation models for the acquired towers;

developments in the wireless communications industry in general, and for wireless communications infrastructure providers in particular, that may slow growth or affect the willingness or ability of the wireless service providers to expend capital to fund network expansion or enhancements;

our ability to secure as many site leasing tenants as anticipated, recognize our expected economies of scale with respect to new tenants on our towers, and retain current leases on towers;

our ability to secure and deliver anticipated services business at contemplated margins;

our ability to build new towers, including our ability to identify and acquire land that would be attractive for our customers and to successfully and timely address zoning, permitting, weather, availability of labor and supplies and other issues that arise in connection with the building of new towers;

competition for the acquisition of towers and other factors that may adversely affect our ability to purchase towers that meet our investment criteria and are available at prices which we believe will be accretive to our shareholders and allow us to maintain our long-term target leverage ratios while achieving our expected portfolio growth levels;

our capital allocation decisions and the impact on our ability to achieve our expected tower portfolio growth levels;

our ability to protect our rights to the land under our towers, and our ability to acquire land underneath our towers on terms that are accretive;

our ability to sufficiently increase our revenues and maintain expenses and cash capital expenditures at appropriate levels to permit us to meet our anticipated uses of liquidity for operations, debt service and estimated portfolio growth;

the impact of rising interest rates on our results of operations and our ability to refinance our existing indebtedness at commercially reasonable rates or at all;

our ability to successfully estimate the impact of regulatory and litigation matters;

natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage;

a decrease in demand for our towers;

the introduction of new technologies or changes in a tenant’s business model that may make our tower leasing business less desirable to existing or potential tenants;

our ability to qualify for treatment as a REIT for U.S. federal income tax purposes and to comply with and conduct our business in accordance with such rules;

our ability to utilize available NOLs to reduce REIT taxable income; and

our ability to successfully estimate the impact of certain accounting and tax matters, including the effect on our company of adopting certain accounting pronouncements and the availability of sufficient NOLs to offset future REIT taxable income.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

In order to ensure that the information we must disclose in our filings with the Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Securities and Exchange Act Rule 13a-15(e) as of March 31, 2019 . Based on such evaluation, such officers have concluded that, as of March 31, 2019 , our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2019, we adopted ASU 2016-02, Leases. We updated our lease accounting policy and added additional controls over financial reporting by updating our existing information technology systems to gather lease information for financial statement disclosures required by the new standard. There have been no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 6. EXHIBITS



Exhibit No.	Description of Exhibits
31.1	Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Jeffrey A. Stoops, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Brendan T. Cavanagh, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	SBA COMMUNICATIONS CORPORATION

May 8 , 2019	/s/ Jeffrey A. Stoops
	Jeffrey A. Stoops
	Chief Executive Officer
	(Duly Authorized Officer)

May 8 , 2019	/s/ Brendan T. Cavanagh
	Brendan T. Cavanagh
	Chief Financial Officer
	(Principal Financial Officer)