American Tower Q2 2025 Update

Summary

• Q2 2025 AFFO Just Below Expectations: American Tower (AMT) reported AFFO per share of $2.60, $.01 below expectations.
• Guidance Slightly Raised: Full-year AFFO per share guidance was raised 1.05%, but mainly due to currency exchange rates. The bump to guidance was lower than analysts were forecasting. 
• A Higher Bar: Raising guidance is good, but Crown Castle International (CCI) raised the bar. In Crown Castle International's Q2 2025 update, the REIT raised guidance materially without any benefit from foreign exchange rates.
• Year-Over-Year: AMT is still delivering solid growth in AFFO as adjusted. While the earnings report was less than investors hoped for, it was not bad. The big challenge appears to be that investors were looking for more following CCI’s update.
• When I refer to “AFFO” for American Tower, I’ll be using “AFFO attributable to AMT common stockholders per share”. We’re not really interested in AFFO that wouldn’t go to common shareholders.
• Overall View: Average quarter. Share prices took a hit due to elevated expectations following results from peers.

Disclosure: Long AMT, SBAC, and CCI.

American Tower posted Q2 2025 results. Shares dipped on the day (at least so far), while the other tower REITs moved slightly higher.

Results

• AFFO per share came in at $2.60. Up 2.4% year-over-year on an adjusted basis, though $.01 below the $2.61 consensus.

Guidance for AFFO Per Share

• Old Guidance: $10.35 to $10.54 (midpoint $10.445)
• New Guidance: $10.46 to $10.65 (midpoint $10.555)
• Guidance raised 1.05%.
• Much like Q1 2025, the boost to guidance was driven by exchange rates.
• The new guidance reflects about 6% growth in full-year AFFO per share as adjusted.

Note: Adjusted figures are to control for the transaction where AMT sold off assets in India. I concur that using this “adjusted” basis is a reasonable way to measure the recurring performance of the portfolio.

Data Centers

Data centers are the most fashionable real estate currently. That’s the property type where we see the really elevated AFFO multiples. The current environment has been very favorable for them. American Tower is the cell tower REIT that also owns data centers. Even Digital Realty (DLR), a REIT with exceptionally poor AFFO growth over 6 years, was able to increase guidance for the year. Consequently, analysts probably saw that as another positive sign for AMT.

Note: I believe DLR remains severely overvalued. Most of their growth is in the share price, with only modest improvements to fundamentals. The best thing DLR can do for shareholders is issue more shares at the elevated prices.

Other Notes

Shares of AMT are currently down about 3% on the day while their tower peers are up 0.5% to 0.9%.

There were a few slides to highlight:

Source: AMT, Purple text by author

The outlook for adjusted EBITDA was raised. That’s nice, but the particular items driving the increase are less important for our forecasting.

Now we can move on to look at the change in AFFO guidance:

Source: AMT, Purple text by author

We can see here that the boost to AFFO is really just the boost from FX, which refers to foreign exchange rates.

Conclusion

Average quarter. Certainly not bad. Guidance was still increased, even if it doesn’t mean as much as it would sometimes. I believe the market simply had higher expectations following the strong performance by CCI. Since CCI increased guidance materially without the benefit of foreign exchange rates, expectations were elevated going in. I don’t see any reason for this report to have a big impact on expectations for American Tower.

Disclosure: Long AMT, SBAC, and CCI.