AT&T $850M Sale-Leaseback Ready For Redevelopments

Telecom giant AT&T (T) has struck an $850M sale-leaseback deal with New York-based investor Reign Capital, per CoStar.

Deal Details

The deal involves 74 of AT&T’s aging central office properties across 23 states, allowing the company to gain financial flexibility while still maintaining operational control over critical communication infrastructure.

With plans for redevelopment, these properties offer a new life for once-underused assets and serve as a blueprint for future corporate real estate transactions.

Reimagining Legacies

The properties sold to Reign Capital were originally built to house AT&T’s legacy copper network, a bulky and energy-intensive system now being phased out in favor of more efficient fiber and wireless technologies.

Over time, AT&T found itself using just 35% of these properties, which are largely underperforming in terms of operational use. By entering into a sale-leaseback deal, AT&T is not only shedding its surplus space but also retaining the ability to use the facilities it still needs for its comms. infrastructure.

This deal provides AT&T with a fresh opportunity to streamline its real estate footprint and monetize assets that were previously considered stranded. The agreement also includes a provision for AT&T to earn revenue from any future redevelopment of these properties, creating long-term value.

A Creative Solution

For Reign Capital, this transaction represents a significant opportunity to acquire real estate with redevelopment potential. The firm is known for its focus on adaptive reuse and modernizing historical buildings, and it has a history of turning aging structures into valuable properties. 

While Reign Capital has not yet disclosed its specific plans for these sites, the deal opens the door for creative redevelopment projects nationwide.

In a statement, Michael Ford, AT&T’s Head of Global Real Estate, called the deal “a creative solution providing both upfront and long-term value” and noted that it fits into the company’s broader transformation initiatives. The partnership with Reign Capital builds on a smaller deal in 2021 when Reign acquired 13 properties from AT&T for $300M.

With the portfolio now under Reign Capital’s control, AT&T expects to begin receiving revenue from the redevelopment of these properties in the coming year. This deal could serve as a model for future real estate transactions as AT&T works to optimize its assets further.

Setting The Stage

AT&T’s sale-leaseback transaction is part of the telecom giant’s broader strategy to adapt to the changing landscape of telecommunications and real estate. 

As the company prepares to phase out its legacy copper network by the end of 2029, it is also reevaluating its real estate holdings. The company’s deal with Reign Capital is structured to allow AT&T to continue using necessary infrastructure while monetizing underutilized spaces. This marks a clear shift in how the company plans to approach its real estate portfolio in the future.

The deal not only helps AT&T reduce its real estate costs but also provides an innovative way to unlock value from aging properties. With similar deals potentially in the pipeline, the sale-leaseback structure offers a flexible and financially beneficial strategy that other companies look to emulate.

Why It Matters

AT&T’s move to sell and lease back its central office properties is a forward-thinking example of how large corporations can repurpose and monetize their real estate assets. In a time when more companies are looking to downsize or offload underperforming assets, this deal illustrates how real estate can be used as a strategic tool to generate value.

For Reign Capital, the opportunity to redevelop AT&T’s properties across 23 states is a big step in reshaping real estate previously tied to outdated telecom infrastructure. 

These redevelopment projects could breathe new life into neighborhoods, especially as the country continues to shift towards more efficient technologies and smarter urban planning.