Overview
Founded in 1995 and based in Boston, American Tower Corp (AMT) is one of the largest publicly traded global REITs. A REIT (real estate investment trust) is a company that finances, owns, and operates income-generating real estate. REITs can range from equity-driven to mortgage-driven (generating income from either rent or interest on loans) and can hold real estate across sectors such as residential, commercial, and healthcare. In the case of AMT, it’s a specialized REIT, focusing on wireless towers and broadcast infrastructure. AMT owns and operates more than 148,000 of these “communication sites” globally, with 42,000 of them located in the US and Canada. AMT also acquired CoreSite in 2021, allowing the company to expand its real estate footprint into data centers.
Investment Thesis
When it comes to REITs, the best way to calculate true value and cash flow potential is by using AFFO (Adjusted Funds From Operations). This metric, divided by the number of shares outstanding, gives investors the best insight as to how well the REIT can generate income. AMT’s AFFO in 2025 came out to roughly $10.76 a share, and guidance for FY 2026 stands at $10.90 to $11.07 per share. Using $10.99 as a base estimate, it puts AMT’s current share price (of ~$174) at about 15.8x AFFO. This P/AFFO (price-to-AFFO) is slightly cheaper than the sector median, and for AMT historically, it indicates that the stock is currently undervalued (with the highest P/AFFO in the last 10 years of 26.4x in 2021). If AMT’s AFFO continues to grow around 4.5% annually (base case), it puts fair value estimates right around the $210 mark. This is right in line with analyst estimates, as the consensus on the street is a “Buy” or “Moderate Buy” and an average 12-month price target of about $215. On top of strong analyst estimates, the stock currently maintains an annual dividend yield of ~4%.
Potential Risks
While AFFO looks promising, and a position in AMT offers our CFR portfolio much-needed real estate diversification, there are some risks involved. Specifically, cell tower disruption, with the growing satellite and telecommunications sector posing the biggest threat. That being said, for the time being, terrestrial cell towers won’t be going anywhere. Satellites currently do not have the capacity to support large data volumes from high-density centers, like major cities, and are most commonly utilized for areas that lack cell towers (take, for example, Starlink and its uses in remote, off-grid areas).
Why-to-Buy
With a stock that’s generally undervalued for the sector, strong analyst estimates and a growing AFFO to support them, and the diversification of a REIT in an otherwise AI- and tech-heavy portfolio, AMT is CFR’s Pick of the Week!
