American Tower's Underperformance Continues: A $100 Billion REIT Struggles

American Tower, a $100 billion cell tower REIT, has underperformed the market by 35% since the recommendation against investing. The company has yet to address concerns over high leverage and declining same-store revenue. Despite a 12% dividend yield, investors should be cautious due to the company's poor performance and high leverage ratio.

American Tower Corporation (AMT), a $100 billion cell tower real estate investment trust (REIT), has faced significant challenges in recent months. The company has underperformed the market by more than 35% since the recommendation against investing, as reported by Seeking Alpha [2]. This underperformance is largely attributed to the company's inability to achieve substantial growth in a low-moat industry with minimal expansion opportunities [2].

American Tower's recent earnings report indicated only a 1.9% revenue growth in FX-neutral terms, which is below the YoY inflation rate [2]. The company's adjusted AFFO per share grew by 3.9%, but this was primarily due to slight improvements in AFFO margins rather than significant growth in core properties or cash flow [2]. The company's reliance on FX variation for revenue growth is concerning, as it indicates a lack of organic growth.

Investors have expressed caution due to American Tower's high leverage ratio, which stands at 5.1x net leverage with more than $10.5 billion in liquidity and primarily fixed-rate debt [2]. This high leverage makes the company susceptible to higher interest rates, which could exacerbate its financial obligations. Furthermore, the company's use of shorter-term debt indicates a concern over its debt load, which could put it in a more vulnerable position in a higher interest rate environment [2].

Despite these challenges, American Tower maintains a strong dividend yield of 3.3%, which accounts for most of its shareholder returns [2]. However, this dividend yield is not sufficient to match the historical benchmark of S&P 500 returns, which have averaged roughly 10.3% or 6.5% inflation-adjusted [2]. The company's minimal inflation-beating growth rates and cash flow rates indicate that it may not be able to keep pace with the broader market.

The recent sale of 98,933 shares by Jump Financial LLC, reducing its stake by 91.7%, further signals investor sentiment towards American Tower [3]. Several analysts have revised their price targets and ratings for the company, with JPMorgan Chase raising its target from $250.00 to $255.00 and HSBC downgrading it from a "buy" to a "hold" rating with a target of $235.00 [3].

American Tower's underperformance and high leverage ratio should be a cause for concern for investors. While the company maintains a strong dividend yield, its poor performance and high leverage ratio suggest that it may not be a suitable investment for those seeking substantial growth or capital appreciation. Investors should exercise caution and conduct thorough due diligence before considering American Tower as an investment.

References:

[1] https://www.marketbeat.com/stocks/NYSE/AMT/
[2] https://seekingalpha.com/article/4818130-american-tower-we-expect-underperformance-to-continue
[3] https://www.marketbeat.com/instant-alerts/filing-jump-financial-llc-sells-98933-shares-of-american-tower-corporation-amt-2025-08-28/