RADI - Earnings call transcript Q2 2022 | Radius Global Infrastructure, Inc.

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Operator

Greetings, and welcome to Radius Global Infrastructure’s Second Quarter 2022 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jason Harbes, Head of IR. Thank you.

You may begin.

Jason Harbes

welcome, Earnings the Call. and Second Global operator, XXXX Quarter you, everyone, Radius to Infrastructure Thank quarter by In and Glenn an second Co-Chairman, moment, Breisinger, will results, a Bill Officer. provide overview Berkman, our Chief of update more detailed a our Financial CEO XXXX from followed our up we your call questions. After these the comments, will open for

forward-looking we comments made the begin, many that of laws. I Before securities are would statements considered everyone federal like to remind under today

the to our SEC, numerous statements in release forward-looking those date, earnings undertake obligation today’s subject that filings with and expressed. of statements described to these no these statements. As publicly risks could and are cause differ These uncertainties update and to as revise we future speak results from or

may release on GAAP certain financial the this the today’s information. Combine reconciliations we earnings together comparable information most Bill? on directly website addition, yesterday’s financial and call, information in at non-GAAP with www.radiusglobal.com. to our supplemental available measure discuss financial In

Bill Berkman

Thank quarter call. XXXX for you earnings our second us for conference all today joining

X,XXX of growing as our economic assets a world’s long-duration buy resiliency the revenue quarterly be as borrowing periodic is continue to over million, we I’m Leases business of in global our helps quarter of pricing, net stability where mission-critical and The growth of lease to environment, from cash the infrastructure from up base in XX% the over escalator, largely of deliver reminder, XX countries. increments over data critical we times, net the generated of most is local own second downside-protected the continued is benefit record sites GAAP pleased time. infrastructure. year-over-year, believe assets we some the political show growth we in high-quality, redeploying These streams business organic pool continued to generated averaging valuable over churn of mute we over effects attractive long-dated, triple on from X,XXX digital these which Even and effects and periods in variations believe impact by digital now This report strong results evidenced flows of returns. what large current underlying as enjoy lease these flow our currencies, volatility foreign exchange provisions. quarter’s amidst and infrastructure the enhanced assets in untapped brief well inflation-adjusted currency headwinds of which rates. this cash long and high-quality $XX.X recent asset As volatile by of competition in rents local

As you and will approximately to in rise over hear we time. quarter, quarter leases inflation next X% rent X.X% portfolio our the to in run continue to annualized had shortly, of approximately rate organic growth organic to that second contractual adjustments by annualized as our expect in of continue an net growth kick

As X our supplemental XX% XX% the of years. portfolio end in and annually, of noted escalates escalates escalates years of X% our every X every disclosures as June,

the million to for a $XXX previously puts plus annualized on the -- $XXX calendar of half $XXX the Total acquire exceed of rate in-place to guidance us run $XX increase. first deploying acquisition current million total annual rents During XX% million, of million a $XXX a acquisition of invested XXXX, rent approximately additional trajectory stated increasing for rent we year. to approximately representing quarter, our year-over-year CapEx million our annualized of CapEx

near-term for no fixed record which results to XXX% are issued from really high After returns, producing of our and as have capital with this macro value-accretive every for and variability I our in bears we investments, well team equity the both deployed. the incremental maturities. repeating. especially standards have was target there million debt and only $XXX capped be acquisitions cash amount be noted, and previously our of will from on over environment. extremely investments, but we sheet economic these as making that global now I’m quarterly in of this facilities used As proud raised say rate meeting quarter, it or underwriting interest and balance

assets to of a continue types, investment these broaden, With team market a acquisition total demand, we set and as to substantial digital the and potential storage, to addressable our vast pace owned networks amount where of which data potential capital meet a continues infrastructure, provides grow into continue of fragmented addressable by highly supporting originators and acquire, our processing our believe communication of global landlords. as are market will well of asset with properties grow range delivery of to to

is will to grow both conviction CFO, rents our organically overview the we’re provide in continues in our inflation, results portfolio yielding of Glenn business no Glenn? whether detail. holdings origination impact financial other of Breisinger, free business our that with own continue of model. macroeconomic While FX from or fact factors, rates, interest our combined to and able forces, now the more current our to an reinforce new from

Glenn Breisinger

Thanks, Bill.

grow portfolio taking the global in to second expanding the our advantage footprint to capital. quarter, across deploy opportunities continue of We investment

interest in X% investment comprised Bill in tenant sites annualized Colombia. as Mexico streams companies June developed global denominated XX% represented with markets, and Approximately in we base rents tower As in XX% respect XX% our XX% predominantly of of of remaining other dollars vast network X,XXX in mentioned, dollars, $XXX.X Canadian over are based of end located remainder dollars, XX% previously grade. own of are the lease the as and are XX, currencies. over Chile, in With with million XX% property our which in-place mobile operators, to pounds, XX% euros, majority in of British X% U.S. in the of XXXX the Brazil, a by rents, June, in Australian and real

are with protection provide the against that contractual escalators rising either of XX% impact of also impact nearly muting rates. the directly indirectly inflation inflation, interest which of local Importantly, to uncapped or meaningful us has rising while linked our indexes, portfolio

generally up that at gross predominantly we and fixed quarter, of profit revenues in Australia. portfolio in or XX% the ground are and margin year-over-year $XX.X to other Cap annually. contractual and were $XX.X The flow located are X% in resulting XX% what Canada these fixed to our to million, as refer gross million rents the Geographically, XX% escalator profit U.S., cash approximately XX%. of escalators rose between has a X%

enhancements, rents of revenue constant many second impacted jurisdiction. fee total new factors quarter, approximately quarter, basis, was represents from XXX a assets simple streams. a portfolio $XX.X record cash a year-over-year partially X.X% In note anticipate the basis. contractual acquired offset from reflect the CapEx of and different to annual organic on $XXX.X when acquisition rent the that of from of XXXX. This escalators fully revenue by XXXX. contractual resulting net each inflation-based that we which as we initial our $XX.X to approximately net increase spent which across which growth $XXX.X excluding X.X% cash X% beginning of organic have spend mix quarter, that compares the that that with due Our has margin of jurisdictions. a reflect property same-store million quarter significant combination burdened We periods generated the second are SG&A includes sales generate not a yield on vary existing previous second This our on this in million X.X% primarily compared acquisition, rents we to in ground XX% million we different our in escalators which rates X.X% the We by revenue acquiring organic taxes. these of for the currency countries This investment expenses origination our Please cap are is approximately in resulted revenue million flow of second growth quarter. deployed lease basis, X.X% lease of all new gross streams gross churn, by in been inflation a for increase does will of to increase additional across acquired, primarily the in to deployed associated a in pace of due quarter interest quarter growth in

balance our and to Turning liquidity. sheet

of existing previous we to senior-secured mature $XXX scheduled X.XX% and into million entered loan in we a a the approximately the our rate an accrues mature interest compares domestic at to facility, interest October new XXXX. annual refinanced fixed is facility. This April facility. under which scheduled was of XXXX, rate and During credit This quarter, to million $XXX X.XX% in

as has Again, approximately website Radius company now fixed average supplemental is which weighted of recent less As end leverage closing cap for as annualized of outstanding gross the rents annual of has a cash of fee. Inclusive an facility this billion flow, X.XX% a eligible of million rating received result of net the defined a refinancing, which and Fitch total of transaction, the Radius the in-place from debt of servicing of second quarter. $XXX $X.X the debt A capped posted outstanding of our remaining cash of years. of details. additional maturity is yesterday our as all a $XXX or to with June approximately after market of XX. most a of and refer to weighted Please coupon rate Bill? the liquidity, for million had X.X% debt for average X.X closed interest-only materials our available incremental investment The

Bill Berkman

questions. for please Operator, open Glenn. Thanks, call the

Operator

James. question [Operator Our comes Instructions] Ric Raymond Prentiss with first from

Ric Prentiss

of guys. questions, couple A

as obviously, we we look look and pacing, at at funding. First, aspect, growth external your pricing

point in set vary, the could So So first It that’s can questions. exceed update When the was quarter? opposed say you the was lumpy actually just expect out. you to the to as this as pacing quarter. pacing would side, guidance strong you How of it? on

Bill Berkman

think more try answer a back left visibility live though by whether on being think the But optimistic I I’ll edge we’re way That should even from to specific it’s take away said, high pretty think we good best give and confidence, our leave hard and I should statement say way go giving we even that the to I right it it we you’re never -- think it’s and rewarded guidance, optimistic that. it is just we when have being easier update now, it. a bit. highly substantially you about the to

Ric Prentiss

Okay.

as X.X%, think I we On rate pointing in, cap out, was modeled had came the Glenn pricing X.X%. side,

seems attractive like in you’re it even So bringing environment, caps. this rate interest still in

as expectations vary where can kind How by this think holding are that and future, into how out are point up those cap about should look rates country. of we environment? you You in the seller

Bill Berkman

always still them, competing point, the I It’s our a that a is Clearly, in power there early got because think terms it’s with benefited that. for really is seller has be what adjustment going vary helps, dynamic companies, not to expectations competing I When think will we’re tell not and expectation going if some little environment country different some I with that macro at a by we’re there’s current to set be that going of to Ric. are. every on. the hope sellers’ pattern. just

Ric Prentiss

It recession does. times recession time could to out point? offer? the sale actually on there, of personal that I cause that it’s that Any hit Also, stream, asset know say, in different a a lot life revenue of people sometimes thoughts to of bid a maybe the an the it’s trigger markets or potential does involved. more

Bill Berkman

on lot. We’ve Well, have hardship, or is see are because the a sellers of being said the something and so long more going to end it’s to macro or of we said, just a day, happening expectation our because can, the course, hopefully, they first of sell. at the diversified. they hate that face when the drive, people so the free, this but because we environment one all, to because people site carriers with having it’s yes, fragmented, risks When typically for are need we take particular capital some

be X that, we probably Is long-winded that know. way The pretty the quarters in win it sales. helpful a now, a we would kick question from saying, is think it now from of So yes, when that or in? don’t just quarter will

Ric Prentiss

$XXX on left. the on X of reloading How side, how million runway sense. both then should you would think pointed you that when X we and funding about Makes of as And cash Glenn And the think and out, side? the equivalents quarters? about funding quarters, kind

Bill Berkman

it going think, to we’ve and our always done this we quarter. spend and great means the flippant I we’re finding in opportunities. and is hope job sound mean, I That funny, all to

having Now an we’re all constantly that said, of being it. got feed business we’ve the in machines, acquisition to

ranging can are that our we from But whether for capital process. that And I bringing or the I and like So an investor you we as raise say in we guess can and in just debt the raise going And have equity are on price originating is then always forming and initiatives a at, that them. think new tools adding refinancing facilities we actually out facilities. that we’ll debt on overnight the episodically, think need have got to a it on lot we’ll in as could these do money an seeing the the base. of toolbox, that, what face which us some you into you’ve needs about can’t we selling toolbox to to if tools it’s equity to acquisition visibility do and a in just And debt, because I always project are capital support offering what have think we’re your our structure. JV-type pipeline. asset for as you and in JVs recycling we there’s of periodically,

Operator

question next Credit Badri with Sami comes Suisse. from Our

Sami Badri

wanted really the lot clearly XQ And thing escalators, to of escalators some have do contracted this XXXX. Bill, made us much talking you’ve how is to how understand, -- One like guess, world negotiate just if us could inflationary there from and I improve, cap right? bit given I progress little time when begin you escalating, getting a of do these how about you conversation more helpful. negotiations of a some a negotiations of come with to does -- go? you your dynamic at that, spend a globally runway would us business keep on lot that distributed, download giving a kind do like the cap have X.X%, So just give where that of in how a in? How to is escalation a much very be to perspective these runway go, longer guys wanted dynamics

Bill Berkman

know is if expire. think just disclosed lease thing we’ve And we exactly our lease does the think the don’t average to weighted about what first I need when I is.

to the on is as us. And and mean, I you One for type you as or a we I the larger that our it, we a construct get higher then that’s going want have you think whether ways think is goal discussions job. them to tenants. see and of because when very our to So a makes to approaches I negotiation with of can about I win-win duration, sense long partner to just not want do arrangement mastering our some X renewal with the us there’s and what time see only just good we tenants lease think is are level always expiration. because landlords partner be, lets for to guess, it Because having a to a what some which lease a it us see and do

what right said, course, have. permit of being you’re because our simply that all us to Now now, seeing, that’s escalation contracts

where years XX years, really XX problem. had they’ve inflation never was Now a

that a think us tenants up, any So to that. to for last give don’t haven’t we I seen seen -- -- a give where couple or our of have pause anything years of of if it’s because inflation haven’t none went them inflation meaningfully you expect like decades we

Sami. So that that of off, located. typically I roll and that simply basically when where leases who’s negotiate and country leases, one-off that a hope someone tenants with asset local bucket each helps, there’s to of them is our we

Sami Badri

Yes.

X%, scenario to a scenario dynamics to happen assuming that be go model? X% there like macroeconomic could escalators Is So like, right, actually in where up say, there for or your this continue? ongoing a

Bill Berkman

if so contracts, depending to got we’ve XX when years right? or of got or then left course. because X -- contract’s X yes, the absolutely go, another on And Yes,

Sami Badri

adjusted EBITDA. My other it. question on Got is

a that more conscious -- the took definitely being in or or or conscious more more quarter. that origination being you management Was sorry, So maybe... cost productive step-up was the team

Bill Berkman

I’ll refer to Glenn on this.

Glenn Breisinger

Sami, productivity, revenues That’s them. team the an to origination relative the cost acquire generated sure, to for in

Bill Berkman

our origination and why parcel Just attention it, calling look us -- you and That’s accountants to all breaking let we annualized mean in-place I acquisition out know do SG&A of on part all costs, we us, what I you, don’t view to it’s things. really focus remind typically even right? we because though in as rents, to probably [indiscernible] the personally these

Sami Badri

absolutely. Yes,

very continues time to you last increase as significant remain in well, kind actual period. your spend of ‘XX it $X and Would managed XQ productivity is, in opportunities above inflection capital-deployed deployed guys therefore, of deploy be origination going XQ XQ? comparable and And economic this about that talking my like a significant ‘XX also assumed or capital could question be to So to on really being range. CapEx lot very million team guided pretty and you’re of are we optimistic type

Bill Berkman

information way meaning attributes risk infrastructure in to our right essential, say this the us I they about of asking, us hear in and want we past, other as perhaps try do of much we they’re to think standards. that saying we’re updating what can to underwriting believe test think that digital find that left be optimistic evolution as with respectful want you’ve all our I opportunities want and And to in achieve we mindful kind returns the we we’re always the that i.e., that to give have I we can we today, you requirement Glenn, the what tied gives I heard the we’ll rather stand is looking and Because doing. we feel you’re of time. guidance. highly remember, given they’re assets long-winded situated comfortable similarly where say, discuss identify mission-critical, to also just

can achieving goals we short-term well what will So our market after as us for both to originating. that also our go allow of addressable hopefully, expand as

Operator

Stanley. comes with Simon Flannery [Operator Morgan from Instructions] next question Our

Simon Flannery

the escalators the through. You talked past, the about coming importance of

annual up them any there kind Or is If them? said the there’s Is there? fairly it year-end? you Is it of color to a are escalators. through think bunch a year? most I seasonality at of really smooth

Bill Berkman

in Glenn, can think it do just I actually our broke your take... out. release, -- you you have we at

Glenn Breisinger

correct. Yes, that’s

that really the almost in-place on at what was the that see did various is XXXX, size end We I we’re So would various can out seasonality Simon, in that And there annual. start a because escalation break not frequency. assets times XX%. their QX out was imagine you and can dates have is of that point portfolio XX% you contracts. acquiring

to and based upon a and escalators acquiring we’re escalators So how X- X-year we’re more away moving term from annual assets.

Bill Berkman

release, In actual of breakdown? sort let it? or our what the to You were point Simon know

Glenn Breisinger

Yes.

we’ve in were described escalators here, we when disclosed X%. or it to So Obviously, and X-year XX% supplement were acquired assets appropriately, are escalators we’ve no or our the XX.X% XX% escalators have X-year annual. consistently

Bill Berkman

Appropriately it to priced course. in return get want, it’s we means us the -- of

Simon Flannery

the any take obviously, thinking pretty And -- are volatility about moved steps year-to-date. reduce and things that? around you other like sharply currencies the you Can hedging you how can to

Bill Berkman

know certain is I out running of the following, leverage, it techniques don’t we run you’re you’re effectively out, which equity. have look the hedging reduce taking what at we mean, level are in, be because you’re we with we can if would there, that at a equity to ourselves -- less lot otherwise taking say a "volatility." we of so but I constantly

amount have you actual in volatility, you declines. when also the declines, course, local So actual interest debt currency, outstanding of the your pay it’s

on isn’t actually then cash for when meaningful. look is given couple that. goes what recurring of happens so quarter really impact a levered currency against It’s percentage flow, so points the you our any if And free

cash being a that with Now U.S. dollars. we of all lot in said, sit

try of currency continue then strong view assets. using currency And get the to we faster if a is that’s the because to that going stronger, U.S. a remain even us that in or buy course, buy situations assets in declined. it those dollars go U.S. then, -- have even to we’re strong are and we So to go behooves

that it And looked simplify too the XX to duration sort muting of approach. type over time, averaging it it when to I of a because guess it’s really period us. look longer today some a hedging. guess not very picked do of over mean has meant word X we stress much. We cost and the see for I do tested wouldn’t of years, volatility constantly. So well dollar is this But we’ve we used out quarter-to-quarter. at worked you’ll And I

Simon Flannery

you the to Can the just Great. us quarter. and bit a look just expectations more a you’re the seeing buyer volume there’s I at give M&A in this willingness M&A, see insight great between And into in if there’s then about think reduction have pay. to coming significant back you I and others mismatch little to market, deals, talked seller what broader think Because the been transaction marketplace?

pause So affected that there’s doesn’t you. of a little activity, to slowdown bit a been or have in a seem but

the how So evolved what that’s last few seeing describe you would over months? and the you’re marketplace how in

Bill Berkman

is are the from think to willing ranging we those of points, many then fiber as up I thesis we $XX,XXX aggregation our $XXX,XXX that an so a behind to of and do it discrete sort And which the lot deals a be goes larger. core size business, to average. some of do can to probably our sleeves roll

together. say come a But larger million same where they and because just try million many, we in size. bigger portfolio, willing more sometimes size, a referring it’s little a when scale a deal, the we’re the that to lumpy aggregate buy it probably $XX as deal, little you’re it a because to M&A and a which all smaller it’s and would make larger not we’ll a And deals portfolios $XX many

hard. our is originators work. and us across capital real a XX advantage think competitive countries working team of gives marketplace But in the to we to that we’re what put think I

Simon Flannery

-- you’ve very pressures you been labor has how managing are since SG&A lastly, side, X there inflationary just got on And the Great. tight...

Bill Berkman

a direction. making really and the we a know, personnel, when sure keep what good our is the our team growing part that incented awful want so A paying job, lot make well right? I’m to as sure all you SG&A, we And is and ore right of and are performing doing them in big people do really

think So be I much have don’t maybe too seen but I’m probably of too there is pressures defer impact, quickly. inflationary the anything that I missing? to and speaking I’d Glenn we’ve Glenn, an

Glenn Breisinger

No, would great, anything, I not appropriate. Simon. That’s say Bill. missing no, all this you’re

the about bulk and If the in SG&A effectively is has cap you so of assets, acquiring X.X% rate, our spend to it’s our think been relating consistent. which

it’s that So any look our spend inflationary incumbent in upon pricing to sure to an to costs that how us we make assets we have get at couple we’re SG&A with appropriate return.

Bill Berkman

And add, one and view Simon, all you’ll laugh putting But way we’re for the gives are that we and last in us and to I’d because of to that. just asset say part thing of you it origination heard of course, we’d this. say we part when I the SG&A, price, not right like, permitted the this while of and capitalize deduct in me IRS, the account as

which corporate time at do And SG&A, our company. tax holding reduction like local the rate we because $X.XX part a have look Clearly, to that’s so periodically. every there it’s taxes, you of at that are pay

Operator

the comments. Berkman There back to questions at turn further are in call to this over queue would like I Mr. time. for no closing

Bill Berkman

you much, very quarter this us generate able acquisitions excited everybody. Thank end of to you, compelling. to the been has joining Again, they’ve Thank today August. super want and a everybody, that have in of hope I us both and increasing everybody hopeful Hey, repeat achieve our what we think I I’m thanks, operator. summer. to proud just and that great are team for

Operator

you, Thank everyone.

this and at have lines your disconnect great time, may You a day.

Radius Global Infrastructure (RADI) 13 Aug 222022 Q2 Earnings call transcript