We recently learned that leading communications real estate investment trust American Tower (AMT 4.17%) plans to acquire data center REIT CoreSite (COR). In this Fool Live video clip, recorded on Nov. 16, Fool.com contributors Matt Frankel and Matt DiLallo, along with editor Deidre Woollard, discuss why American Tower might have decided to branch out.
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Deidre Woollard: Let's talk a little bit about the CoreSite deal, because that's a smaller deal. But in some ways I think it got more buzz just because of who was buying who. American Tower is a giant in telecommunications and I believe it's the biggest REIT, Matt Frankel can confirm that for me. But $10 billion deal, 25 data centers, 21 cloud on-ramps, really interesting.
One of the things that we always talk about with American Tower and one of the reasons so many of us like it is that American is in the name, but it's global. I think there's a real opportunity for them to take that model maybe and build data centers all over the world with CoreSite.
Matt DiLallo: That was one of the things that I found interesting. I've been following this company for years and I completely missed in their third quarter report that they actually bought two data centers recently. One was in, I think, Florida and the other was in Georgia. It was tucked in there. It was a hint of things to come. They're not the first tower REIT that's bought some data centers.
SBA Communications (SBAC 3.85%), they've also had some data centers. It seems like they see lot of correlation with the complete package of infrastructure, for example, the tower REIT Crown Castle (CCI 4.61%). They're doing towers, they're doing fiber cables and they're doing small cells. It's like there's integration of infrastructure.
Brookfield (BN 2.39%) is another example. They have data centers, they have towers and they have fiber. It seems like they've really come to realize that the best way that they can tackle this problem of speed and just resiliency is integrating data centers with other communications. American Tower's getting big bet here that that is the wave of the future.
Woollard: Do we think that this is just the line between the two of these types of REITs is getting blurred because it's all just about communications and the ongoing need for data.
DiLallo: I think it's really become just a data infrastructure play. We had always looked at these separately as, cell tower research, mobile and data centers, that's the cloud. With 5G, we're tapping into the cloud from our mobile devices. We can work from anywhere. There just seems to be this overlap and it seems the best way to get the best solution in the future is to merge these two ideas. That's where the whole idea of edge computing comes along, where you're going to build data centers closer to the end-users. In this case, it will be the small cells of building back closer to users so we get more speed. There's just more capacity in the system. It really does seem this is the way that the future needs to go for them to just optimize all the data that we're going to be using.