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  "documentTitle": "American Tower (AMT)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2013-08-12 00:00:00",
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      "text": "Management has still failed to provide any substantive rebuttal to our conclusion that its accounting for the transaction is misstated by approximately $250 million.",
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      "text": "We believe that under GAAP, AMT should book an intangible asset for above market lease on each de facto lending transaction. AMT should then amortize the intangible asset against most of the above market rent payments, and report revenue net of that amortization. A portion of the above market rent payments should be recorded as interest income, and thus not netted out.",
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      "text": "The leaseback term is 12 years, after which rents will likely reset to market. Market rents will likely continue to be far lower than contract rents, which means that tower revenues will fall significantly in Year 13. Management’s statement about “meaningful growth” is again misleading for this reason. (We explained in our initial report why the argument that lease extensions would be at the original rent rates does not hold water.5) Management should explain whether its IRR model has factored in the rent reset.",
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      "text": "AMT's disclosure on capex requirements is likely misleading. AMT disclosed that the transaction requires approximately $50 million in capex; however, AMT has labeled this as “start-up” capex. Start-up capex benefits management because it is not deducted from AMT's already juiced AFFO calculation. An industry source had previously expressed belief that these towers were generally too small to allow for co-location, and would therefore require redevelopment capex. If this capex is really intended to increase the towers’ capacities, then as we argued in our initial report, it should be subtracted from AFFO, and is yet another instance of management misleading investors.",
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      "text": "We reiterate that the historical transactions between AMT and NIHD also have consideration reporting and accounting discrepancies. AMT discloses having paid at least $6 million more for towers than NIHD discloses having received. While $6 million is pocket change compared to $250 million, this much older discrepancy could have signaled the onset of a major internal control problem in AMT's international operations.",
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      "text": "This purchase from NIHD at a very rich multiple further highlights the absurdity of AMT's accounting for, and disclosures about, its Site Sharing purchase. Management has still failed to provide any substantive rebuttal to our conclusion that its accounting for the transaction is misstated by approximately $250 million. AMT is paying NIHD $148,000 per tower in Brazil, compared to the $879,000 per tower AMT purports to have paid for Site Sharing.",
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      "text": "similar provisions in the NIHD transaction – either with NIHD or with existing third party tenants. Note that the previous transactions with NIHD had rent abatement provisions that gave NIHD rent discounts when AMT co-located other tenants on the towers.",
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      "text": "5 July 17, 2013 report, pp. 26.",
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