Earnings Update: Specialty REITs (Q3 2025)

Important Announcements:

Just a quick heads up:

• We expect to invest in a new company tomorrow. Stay tuned!

• We will share our fourth Top Pick for 2026 on Friday.

• I will host another live Webinar in a few weeks. Let me know if there are any specific topics that you would like me to cover.

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We hold five REITs that do not fit into the traditional commercial real estate sector categories. We call these “specialty REITs.” They have nothing in common with each other except that they don’t fit into any other category.

Note that this category of specialty REITs only includes holdings that qualify as REITs. We will address our non-REIT holdings separately.

Since there is little we can say by way of introduction that will apply to all 5 of these REITs, let’s simply dive into their Q3 2025 earnings reports.

• Crown Castle (CCI): click here to read our investment thesis

• SBA Communications (SBAC): click here to read our investment thesis

• NewLake Capital Partners (OTCQX:NLCP): click here to read our investment thesis

• CubeSmart (CUBE): click here to read our investment thesis

• Rayonier (RYN): click here to read our investment thesis

Crown Castle (CCI): This US-based telecom tower REIT has had a tumultuous year, including CEO successions. The CFO Dan Schlanger took over as interim CEO from March until September, when the company hired long time telecommunications industry insider Christian Hallibrant as the next CEO. At this point, the sale of the fiber/small-cell segment is on track to close in the first half of 2026, which will then allow CCI to deleverage (and potentially also engage in buybacks) and concentrate entirely on its American wireless tower business. This will drastically reduce the amount of discretionary capex CCI spends annually. To illustrate, CCI guides for fiber/small-cell discretionary capex of about $1 billion this year but only $155 million for its core tower segment. Excluding the fiber/small-cell segment, CCI saw its AFFO per share decline 7% YoY in Q3, largely due to the last round of Sprint lease cancellations that have been an overhang for the REIT for the last few years. However, for the full year of 2025, management actually bumped up its AFFO per share guidance from a midpoint of $4.20 to a new midpoint of $4.29, a 6% drop from last year’s $4.55. This establishes a new base of AFFO per share from which to rebound and grow in the coming years, and management expects the dividend to grow in line with AFFO per share once the payout ratio reaches 75-80%. We expect the payout ratio to remain a bit higher than that in 2026, so it is difficult to forecast exactly when significant dividend growth will resume. But at a near 5% dividend yield, CCI is already yielding far more than its peers, American Tower (AMT), yielding 3.8%, and SBA (SBAC), only yielding 2.4%. As the REIT finishes its portfolio repositioning, becomes the only pure-play US cell tower REIT, and its growth accelerates (post-Sprint impact), we expect its multiple to expand, potentially resulting in up to 30% upside from here.

SBA Communications (SBAC): Unlike CCI, SBAC’s telecom tower portfolio is diversified across many regions of the world, including the US, but also developed and emerging markets. During and subsequent to Q3, SBAC closed on the acquisition of 7,000 tower sites from Millicom, sold all 365 of its Canadian towers, and repurchased about $195 million of common stock. The company also nudged up its AFFO per share guidance for the year to a new midpoint of $12.87. That said, SBAC’s AFFO per share did tick down slightly YoY in Q3 by about 1% as the REIT’s US portfolio suffered the same last bout of Sprint lease cancellations as its peers. SBAC trades at an AFFO multiple of 14.8x, which gives it about 50% upside to its 10-year average valuation. And while the REIT yields only 2.4%, the AFFO payout ratio is only about 35%, providing ample room for dividend growth in the coming years.