SBA Communications Corporation (SBAC) Earnings Call Transcript & Summary

All right. Looks like we're live. Welcome, everyone. Good morning. I hope you and your family and loved ones continue to be well during these crazy times, but it looks like things are improving. Welcome to the 42nd Annual Raymond James Institutional Conference. I think it's my 25th. So a lot of history there. I think it's probably about our almost 20th probably with SBAC attending, another Florida company. It's our first virtual one for the institutional conference. We miss not being together in Orlando, but hopefully, fingers crossed, God willing, we'll be back together in March of '22 in Orlando and get to see everybody live. We're kicking off. I'm Rick Prentiss, the Head of the telecom services research team here at Raymond James. I'm really pleased to kick off my side of the TMT Day with Brendan Cavanagh, who's the CFO of SBAC, one of the large tower companies and also a large real estate company, having converted a couple of years ago. Brendan, welcome.

Thank you, Rick. It's a pleasure to be here. Hopefully, we'll, like you said, do this in person next year.

Yes. And for those connecting virtually at the investors side, we will be monitoring the chat if you have questions. Brendan and I have prepared some fireside chat topics. Usually we'd call it poolside chats, but I'm still out here in Utah and Brendan is down in Boca Raton. And again, we'll look forward to be together in person. So again, if you have a question, you can e-mail it to me, but chat will probably be working best here on the Zoom platform. Appreciate OpenExchange being there, so if anyone does have any problems, they'll be available to help out. So Brendan, we made it through the earnings season on your side. Good to get the guidance out there with you a few days ago.

I think one of the top questions investors have was just kind of looking at the growth rate, right? That as we look at the growth rate of REITs, in particular, let's with the U.S., net of churn, organic, not external growth, cash [ without all that ] tower accounting craziness, how should we think about net organic cash growth rate? Or you can talk to gross too. But how should we think about that, how it plays out over the next year, over the next 3 years, the next 5 years? Help us understand what we should be thinking.

Sure, sure. Yes, yes. So, obviously, we gave guidance for this year on Monday, which implied a relatively, by historical standards, a lower growth rate. I believe the implied domestic net growth rate was about 3.3%, based on the bridge that we put out on Monday of last week. But it's being weighed on by churn, Sprint churn in particular. And I think going forward, what I'm sure we're going to get into, talking about some of the catalysts that are out there for gross growth, particularly in the U.S., and there are a couple of them. And I do think we'll start to see some real positive implications as we get towards the end of this year, and particularly as we get into the next couple of years. But the big thing that will weigh on it, of course, is the Sprint churn associated with the consolidation that took place between T-Mobile and Sprint. So taking that into consideration, I would expect that in the U.S., over the next several years, we'll see a mid-single digits -- excuse me, mid-single-digits domestic organic growth rate on a net basis. We definitely expect the gross growth rate, though, to grow over the next couple of years. So it really is going to kind of come down to the churn and the timing of that and the amount of it.

Okay. And so maybe high single digits on gross, depending on the timing of the Sprint churn?

Yes. Yes, for sure. We -- I think if you look back at where we were a year or 2 ago, those levels will certainly feel comfortable that we're going to return to that. It's really just a question of how much churn we have associated with Sprint and what the timing of that is. We have a pretty good feel for what it should be, based on the overlap percentages of our portfolio and what the timing is of when those leases expire, that kind of thing. But it's not an exact science because there's no exact agreement as to whether they'll terminate a lease or they'll keep it or they'll repurpose it. There certainly is some potential for it to be a little bit better than we think, but we kind of take the worst case view based on the overlap and when those sites come up for renewal.

Yes. And when we think about T-mobile, they've signed a master lease agreement, an MLA with American Tower. What are your thoughts about doing an MLA with T-Mobile? What would it do with the timing of churn versus the amendment activity?

Well, it all depends, of course, on the terms of the agreement. Obviously, the goal there is that if it's negotiated properly, that will end up probably in a very similar place to where we'd be if we didn't have it, it really just comes down to timing. What's more efficient for them, what's more efficient for us, the idea isn't to create a winner and a loser necessarily. It's to get something that works for both parties. And they'll have certain things that they'll want to accomplish, as will we. But we've done it. We actually have an MLA that's in place with T-Mobile right now that predates their merger, so it doesn't deal with a number of the issues that you're thinking about. But we've entered into those types of agreements in the past with them, and are confident that if we can come up with something, if there's something they need and it works better under that type of structure, that we can obviously reach agreement. But it doesn't have to be, either. We can also do it as we've practiced our business for many, many years, where we kind of do it on an individual case-by-case basis, and that works fine, too. So we'll see.

It's a busy week last week, not just with earnings, but also with C Band auction. It ended, but we finally got the details of who bid, how much, where. And then of course, we've got all the analyst days teed up with Verizon and T-Mobile and AT&T going between March 10 and March 12. Have you heard anything new from the carriers since the C Band auction ended or since the details were put out? Or are you kind of waiting for the Analyst Day as well?

Yes, not too much. I mean they are still in a quiet period, even though those results have been announced, so that affects, even with us, the ability to have certain conversations. They're very sensitive to making sure information doesn't come out earlier than it's supposed to. But we obviously have had general conversations that date back well before the results were out, as the carriers certainly were making plans, thinking about what their networks might look like. And we feel like we're in a good place there in terms of our discussions with our customers, and the future for SBA will be bright as a result of this auction. As you saw, obviously, the main recipients, of course, are the big carriers. They have the most to do. They obviously found the spectrum to be very, very attractive. They paid a healthy price for it. We think that, that's a very positive sign in the sense that it shows that it's important to them. And really, the only way you can realize on that value, based on what they've invested, is to get it out there and get it deployed as soon as reasonably possible. And so we think that's going to bode well for leasing activity for us as we get into the end of the year, and certainly into the next couple of years.

Yes, how fast -- if they were to start putting in lease applications, how fast could it turn from lease application to revenues? And what else is going to be involved to get some of these guys started quickly?

Yes, I mean it can happen relatively quickly. Obviously, the spectrum has to be cleared. So the first phase or group of spectrum there doesn't clear until -- potentially until the end of the year, December of this year. I think there's likely going to be some work that gets done ahead of that time as they prepare for that. So they can get it on air quicker. They're not going to just start at that time. But in terms of actual revenue for us, it usually will coincide with the timing of when the carriers are going out and installing equipment at the sites. So I think there's a chance that we'll see a little bit maybe at the end of the year, but I don't expect it to be particularly material to 2021, and that was our assumption when we put our outlook out last week.

Okay, yes. Because I think our assumption has been some of the ones, particularly Verizon, who bought the early clear spectrum. You don't have to wait for the spectrum to be cleared to hang the antennas. You just have to wait for the spectrum to be cleared to throw the light switch on, if you will.

Yes. Yes, that's right. So there is some opportunity, certainly, but we're already -- now it's March, today's March. So they -- we'll know more, I think, in a few weeks, when they're able to talk freely. They're obviously going to share with you guys some of their plans in a couple of weeks, as you mentioned. And that will be, I think, a time at which you'll start to see a little bit more free-flowing information and comfort with companies, even like companies like us being able to talk about it.

Yes. DISH was also in the auction. They [ hit it ] up with one license down the road here in Cheyenne, Wyoming. Not a lot of money spent, but you did sign a new MLA with them. Talk to us a little bit about the thought about what's involved in that time frame that they might deploy. And services business, it sounds like that was a part of that also.

Yes, it was. No, we're really excited about the opportunity. We have a very good relationship with DISH. We've had a great relationship for a number of years. And so this really kind of puts down on paper that relationship under the new future for them. A lot of our past experience have been as they have been working on their original IoT network plans. But this agreement now, we're thrilled with it because not only does it open up our ability to work more comfortably with DISH going forward, it does provide for a significant minimum lease commitment over the next several years, which will be certainly additive to our organic growth for the coming years relative to what we've had, as we've not really had too much from them in the past. We will likely see some activity this year, but it's probably mostly going to be focused on our services business, as you just mentioned. They are definitely ready to go. But again, the timing of when that hits our financial statements, we keep kind of going back to the same story, but we just want to be clear so that people understand. We signed this agreement. It calls for minimum commitments from them. It calls for a lot of activity between our 2 companies. But the timing of that activity taking place, agreements getting signed and then, ultimately, revenue being recognized in our financial statements, it will probably be de minimis to 2021. But it does set us up very well for next year. Just similar to the C Band talk that we just had on the other carriers, with DISH, we have an agreement in place. So it's a little bit clearer to us. But even still, there's some time frame that it takes for them to actually be able to get out there and get their equipment up and start paying rent.

Makes sense. On the services side, what exactly are you performing for them? Is it RF engineering, site acquisition, installation? Is it on more than just your towers?

Well, it could be on more than just our towers. The agreement, though, is specific in terms of commitment is to our towers. And it is site acquisition and development-related work. It's mostly SAS work. It could end up being construction, but that's not mandated. So we're comfortable that on all of our sites where they'll be signing agreements, that we will be getting at least that site acq work.

And from a standpoint of fair share, there's been a lot of debate over the last, really 6 months almost, about how DISH will apportion their network build. How would you think about what -- what is your fair share, and if you will get it?

Well, first of all, just as a general comment, yes, we'll get our fair share. We're quite comfortable with that. We obviously have this agreement in place now that we know locks in a certain amount of growth that makes us very comfortable with that. But even separate from that, even without the agreement, this is a -- go back to the basics of the tower business. It's a location-specific business. Carriers have certain coverage needs and those coverage needs are going to be built on top of sites that are in the places that they need them to be. So no matter what agreement you sign, if you don't have a tower in the right spot, it doesn't really matter. So from our perspective, we're very comfortable we'll get our fair share, and I don't see anything that gets in the way with that, because of the quality of the sites that we have and the locations that they're in.

Yes. We've got a couple more spectrum auctions coming up. But we've got spectrum auctions hopefully in the middle of the year. It's got a number Auction 108, in the 2.5 gig range. Commission -- or Chairwoman Jessica is working on some 3.4 frequency, hopefully to start the auction by [ November ] this year. We expect DISH and cable might actually show up in those auctions when the prices are lower [ than the C Band ]. But generically, and not customer specific, are you seeing anything from the cable operators as far as the CBRS spectrum that they bought last year?

I would say, yes, but it's been relatively small at this point. I think there's great opportunity for that, but we'll have to see how it plays out. I think there's still some uncertainty as to exactly how those guys are going to play in the wireless space. And it's not really for me to get out there and comment on how that's going to work. But we're seeing some signs of activity there. But I think a year from now, we'll probably have a better, clearer view on what that might look like.

And so some of it being asked about for macro sites, not just indoor?

Yes, both. I mean indoor is certainly, I think, more well-suited specifically for CBRS, but there definitely have been outdoor -- applications for outdoor uses on our existing macro sites.

Okay. Speaking of macro sites, great tee-up for the for debate: macro sites versus indoor versus outdoor small cell systems. Any updated thoughts as you see the networks kind of play out from the customers?

Well, if you kind of break it down, what are the core differences between these things? I mean small cells in general have a narrower, more focused coverage objective, right? So they're typically better in dense or more urban environments. Macros are typically most efficient and cost-effective in terms of providing broader coverage. So as you get outside of those dense urban areas and you start to spread into suburban and certainly into rural areas, the best way for coverage to be provided is certainly through macro sites. The majority of our sites, not just our sites, but most towers, are located in those types of markets. They're not in downtown New York City. So I think there are opportunities certainly for small cells. It's a real part of future wireless networks, but it has its place where it fits in. And I think if you think about macro sites kind of providing sort of an umbrella of coverage for an area, you get to where you have targeted areas that need maybe more capacity or have a specific hole that's hard to get to. Small cells and even indoor DAS deployments, those sorts of things become, I think, very valuable in hitting those particular coverage objectives. But I see them more as complementary in a lot of cases rather than competitive.

And given your ability with your balance sheet, any thoughts that you guys want to put capital to work either in outdoor small cell, indoor small cell or other acquisitions?

Yes. I mean we have some indoor venues today where we have either small cell or DAS, depending on how you want to define it. We have an alternative solution that's not a traditional macro site. Typically, we are focused on locations that have some sort of exclusivity to them. In other words, Macy's Herald Square is an example where we have -- we provide all of the wireless coverage within that venue, and we have the exclusive rights to do that. It's obviously an attractive location. A lot of people come through there every day, or at least they used to. Hopefully will continue to go through there in the future. And so when you have something like that, it has a similar dynamic to a traditional tower site, where it gives you some exclusivity, and it can't just be overbuilt by many other people, in which case that drives down your economics. So when we see those types of opportunities -- and you can see them in outdoor small cells or DAS networks as well, if they're in the right spots -- we would certainly be interested. And we have done some of that, and I think we'll do some of that going forward. But in terms of being just a broad, small cell provider, that really requires a lot of fiber, and I don't see us going into being a major longhaul fiber provider.

Yes. When you think of the dynamics, and we talked about fair share earlier, obviously there's yourself and American and Crown as the publics. How should we think about the other private tower companies, as far as what they're doing in the space? You mentioned some builds. But how do we think about market share and where the private ones could play?

Well, I mean I think it goes back again to the specific locations. I mean you mentioned us being a real estate business. That's really what we are at our core, and that applies to us and all of the tower companies. So it comes down to, like any real estate, a location. And I think there are some private companies who have individual specific locations where they've got the site in the right spot, and for that spot, it's their business to probably take and control. But today, where it stands, the 3 bigger public tower companies own a large percentage, a large majority of the macro sites that are out there across the country. And so there's only so much that can be done to find opportunities where coverage doesn't exist. There are some of those places still, but it's not as great as it used to be a decade ago, for sure.

Okay. And if we take it from the U.S. and head down to Latin America or even South Africa, what do you think the growth rates will be? Again, just generic thought process of net and gross in those markets of Latin America and South Africa versus the U.S.?

Yes. I mean internationally, we're probably going to have, for our blended portfolio, I would say we'll be somewhere in the mid- to upper single digits. But the main...

On a net or a gross basis?

On a net basis. We certainly have the potential to be in double digits as we've been not that long ago on a gross basis, and that can certainly change. I mean, really, when you kind of peel apart the pieces there, the main variables that potentially have some impact on that are probably the CPI-based escalators in some of our markets. Inflation has been lower, particularly in our largest markets of Brazil. And that does affect those growth rates because it's part of it. And that can certainly fluctuate and change the answer by itself. And then churn, which has not been high internationally historically. This year, we are seeing a little bit more, as a result of a couple of specific things. But that -- the potential of that, where you have those events take place, can obviously change the dynamic a little bit as well. But from a gross growth standpoint, these sites are certainly less mature. These markets are less mature in terms of their wireless build-out. So the opportunity, I think, to see higher growth rates is certainly much greater internationally than it is here in the U.S.

[Operator Instructions] Brendan, one of the other items out there is clearly the low interest rate environment has benefited you as far as refinancing. Talk a little bit about where you're at in the balance sheet, cost of debt, tenor out there? And how do you moderate that as it looks like a rising interest rate environment?

Yes. I mean, well, first of all, while interest rates may be rising a little bit, they are still at, I think, by historical standards, extremely low levels. They're just higher than they were 1.5 months ago. So whatever the new low is, that becomes the norm, I guess, in terms of the benchmark you measure [ it with ]. But by historical standards, it's still quite low. We expect them likely to stay relatively low. I mean if you're looking at the 10-year treasury or something, it's just below 1.5% now, and it probably stays in and around that range, for much of this year, anyway, or into next year, I think. Even if there's some slight tick-up from where we are today, it certainly benefits our business in terms of the overall low environment. And when you think about our approach to leverage, we've taken advantage over the years of being a higher levered company in this very long, low-interest rate environment. And I think it's been one of the primary reasons that our equity has actually outperformed our peers, has been the higher leverage. Because we've been able to -- even though we're not investment-grade, take those extra couple of turns and finance them through the secured markets and actually achieve interest rates that are fairly comparable to what was achievable in the investment-grade markets. So...

We're kind of like frozen there. OpenExchange, is he frozen?

I froze? Sorry, are you still there, Ric? Ric, are you there?

Brendan, can you hear me okay?

I can hear you. I don't -- I can hear you. Can you hear me?

Okay. Yes, I can hear you now.

Okay. I gave a great answer, though. I don't know, you must have missed it. Sorry about -- I didn't know. I didn't freeze on my end, so I didn't know it was happening, sorry.

It might have been just on my end too, yes. We did get the questions out.

I was just going to wrap up that we -- it's been a strategy of ours to stay a little higher levered than our peers. I think it has been advantageous for our equity holders, given the long, low interest rate environment. And I think there's still opportunities for us to continue to drive our cost of debt lower. When you look at our next so many maturities just on a refinancing basis, I think that we'll see opportunities probably improve upon those costs as well.

Makes sense. We get the question a lot also, not just interest rate, but inflation. It seems to us like the escalators have been obviously a great benefit if you get 3% escalators in places when it's been 0. What happens if inflation does rear its head? How does it affect your revenues? And how does it affect your business model?

Yes. Well, there's 2 pieces to it. I alluded before to the international area. Obviously, in that area, a lot of our escalators, certainly in South America and in South Africa, are tied to inflationary-based escalators. So as inflation rises, the contractual escalators there will rise. In the U.S., as you know, the vast majority of our escalators are fixed. That has worked out very well for us for a long time, because the fixed level has been in that 3% to 4% range, and then much higher than where inflation was. If inflation were to really spike, that -- we're still subject to those fixed escalators. So it certainly has an impact. But we are able to adjust our pricing for amendments and new leases accordingly, if we're seeing a material increase in inflation. So it would be balanced. There would be some positive in that regard in terms of our ability to keep up with it. And there would be some exposure, in that the escalators are fixed.

Okay. One of the questions we get, actually with fairly frequent occurrences, is the left-field technology question. We've gotten it over the whole 20-plus years you and I have been around the tower space. This current iteration really seems to be a lot of people asking about the lower-orbit satellites. Elon Musk with SpaceX currently gets a lot of buzz out there. We've actually gotten the questions of when will satellites obsolete towers? Now as you're smirking there, I usually will smirk too. But why don't you talk to us a little bit about satellites in general and just other technology risks that you guys might see out there?

Yes. I mean, obviously, we don't really see it, certainly, as it relates to the satellites. I think there are probably rural locations where satellites may provide a solution that is not cost-effectively provided through a traditional macro site. But I think those situations are relatively limited, and they're not really, at least at this stage they're certainly not, for the kind of applications that are being talked about now for 5G. So from our perspective, I think the quality, as carriers compete more and more on the quality of the end-user experience and certainly have to consider the costs as well, I think all of these other solutions that are bandied about are certainly inferior to what can be provided through a traditional macro network. And I think when you look at how the carriers are investing, you'll see it, I think, over the next couple of years. They just spent all this money on spectrum, and you'll see that they deploy that spectrum through macro networks, primarily. And as they continue to make that sort of investment, they're not going to be able to easily or even desire to shift to something else that's untested and likely not to provide the same quality of experience. And the recovery period for that investment, it's quite long term. So bottom line is, I don't really see it as any kind of real threat.

Edge computing. Opportunity? When?

It is an opportunity. We're kind of excited about the possibility of it. I would say, there's a lot of opportunities for mobile 5G. It's still very early days for this. But ultimately, the applications of 5G, in order to deliver what they're capable of, it's going to require faster speeds and lower latency. And one way to accomplish that, probably one of the best ways, is to move the compute function closer to the end user, so that it's closer to the edge of the network. And from our perspective, nothing represents the edge of the wireless network more than the tower site does. So we think we're well-positioned to play a meaningful role in that transition as it takes shape. But I do think, as excited as we are about it and as well-positioned as we think we are, there's still a ways to go before this becomes commonplace. I think you're looking at a number of years before you start to see it really take hold. But we're spending time on it, certainly, and feel good about our placement for it.

Yes. And what have you learned so far in the kind of the trials you've been doing? And as we think about what your role might be, is it just to provide space on the ground? Is it to provide shelter? Is it to be even more hands-on?

Yes. It could -- it actually is still somewhat undecided as it relates to that. We certainly have the space, the location, the landlord piece of it is kind of right in our wheelhouse. And it may be all that we ultimately are. But some of what we're doing now through the purchase of the 2 data centers that we bought over the last couple of years, we do have an edge facility that we built a couple of years ago up -- outside of Gillette Stadium, outside in Foxborough, Massachusetts. We have a tower site there where we have an edge facility. All of this effort around that is to educate ourselves to learn more about operating in the data center space, what are the things that we're good at, what are the things we're not good at, what do we need to get better at, what are the risks that exist, what are the opportunities. All of that stuff is part of this. It's not something you just wake up one day and say, "Hey, we're going to operate data centers." So as we kind of work through that, I think our decision-making around what is the right role for us to play in all of this will start to become clear over the couple of years. But we certainly are well positioned from a location standpoint. We think we're in a great place to capture that business. Even if it is just as a landlord, it's not a bad business, but perhaps it will be something more than that, too.

I'd be remiss here mentioning Gillette Stadium if I didn't mention Tom Brady, the Bucs and Raymond James Stadium, a nice Greatest Of All Time moment for Brady to change stadiums.

Yes, yes. It worked out well for Raymond James, for sure.

Yes. When we think about 5G, what do you think the top revenue-producing, cash flow-producing business case, not use cases, are for the carriers that will help them continue to spend this money on spectrum, spend money on equipment, spend money on rent?

Yes. I may punt a little bit on this question because it's probably better asked of other people, particularly the carriers. If -- I'll give you my own personal guess as to what leads the way, which I think is probably gaming, in my view. I think it's probably the thing that might get pushed further and the -- some of the things that will be able to be done through 5G outside of somebody sitting in their apartment playing, where they can actually take it and make it mobile, will be pretty exciting. But there's lots of things that have been talked about. Obviously we've heard for a long time about connected cars and all kinds of things. But anything that obviously requires extremely low latency and fast speeds is going to be something that can become a reality now that may not be able to be -- have been in the past once these networks get out there and deployed. So I don't want to speculate too much, but I think our customers may have some ideas around that.

And does that mean we should look for SBAC to start sponsoring e-gaming as well a golf tournament?

Maybe, maybe. I wouldn't -- maybe a -- virtual golf, I don't know.

[Operator Instructions] Brendan, as we think forward, hopefully a year from now, we're there in Orlando. We're sitting up on the stools in the front of the room. As you look back from March '22 to March '21, what are you going to be most excited about that actually happened to transpire to say, yes, here's what happened?

Yes. I mean I think it almost definitely will be about the ramped-up investment by our customers around 5G build-outs, particularly C Band, the 2.5 spectrum and DISH. And really, I think a year from now, what will be exciting is that what is a bit of a story today, will be a reality then. And I think that will provide not only a lot of comfort to people about it, but it will be an exciting time as we think about what it means for the future from that point forward as well.

And definitely, investors get this sense of well we said it was slowing down because of the Sprint- T-Mobile merger kind of like '19 into '20, then we said well, it's kind of slowing down in '20. Do you feel comfortable that we're going to sit there and go "it's here". Because a lot of investors have a little bit of fatigue going -- keep telling me it's coming, but is it really coming?

Yes, I get that. I mean I -- we were -- we've always been sincere in our views as we've shared one. And a year ago, probably around this time a year ago, we were sincere in that we anticipated to see increased activity, particularly from T-Mobile as they had just completed, or were just about to complete the Sprint transaction, that we would see that picking up by the end of the year. And actually, we have seen it picking up. I think it took a little bit longer to get going last year than we would have expected. And I think, perhaps, the missing pieces as the C Band spectrum was being auctioned and some of the bigger things that were going to influence what our other customers were going to do around their 5G plans, were still kind of in limbo. It did cause it to be a little bit slower from a broader general standpoint across our customer base. And so I do feel very confident that we're going to see a material increase in activity levels by the time we're exiting this year, maybe earlier than that, but certainly by the time we're exiting this year, and that will set us up well for the next couple of years. And all I can say is, we'll have to wait and prove it out to you. But these auction results and our conversations with our customers across the board give us great confidence in that being the case.

And the last one, as we get ready to wrap up then, is as we think about growth rates, we talked revenue, we talked churn, we talked kind of where it all heads. Let's head to the bottom line, when we think about AFFO per share growth rates. And then the real bottom line for all our investors, which is dividend growth rate as far as return to shareholders. How should we think about how SBAC is positioned for that kind of longer-term AFFO per share and dividend per share growth rates?

Yes. I mean we've been growing our AFFO per share at a very healthy clip up, in the low single digits or teens. I mean this last quarter, it was mid-teens.

Low -- low double digit, not low single...

Oh, did I say single digit -- double digit, obviously, I meant, sorry. Thank you for correcting me. Low double digit. As I think as we get bigger and things become more mature, obviously, it's hard to maintain that. But I do think that double-digit growth is certainly, can be kept at that level for a number of years here. We'll see. Our guidance implies high single digits for this year. And that may be the case this year. But some of the things we've talked about in terms of the organic growth drivers in the future will probably be additive to that in future years. So I think high-single digits, low double digits is a reasonable expectation around AFFO per share growth. But as you take that, and you translate it to dividends, we've been very clear about our expectation that for the next several years, at least, that we will be able to grow our dividend at least 20% a year. We just announced our dividend increase a week ago. For this last quarter, really for this year, we increased it about 25% from last year. So I think we'll be able to comfortably increase it in that 20%-plus range for a number of years. And the beauty of that is that it's still a very small percentage of our AFFO. In fact, the increase of 25% this year is still less than 23% of our projected AFFO for the year. And that leaves us a lot of capacity for other investment, whether that be into share buybacks or into good quality assets.

Seeing no questions coming in on the chat, I guess we'll end with that last one then, about use of capital. As you think about stock buybacks and M&A portfolios, obviously you can never time M&A. But how should we think about the dry powder of being able to put that balance sheet to work, which is not in your guidance?

Yes. So our practice has been, so we put out a target leverage range, as we talked about earlier. And that's 7.0 to 7.5 turns of net debt to adjusted EBITDA. And so if you take that, you just kind of back into the math, when you take -- consider our growth and EBITDA, you can just look at our guidance for this year, the midpoint of what we expect EBITDA to be, and you consider the amount of cash that we generate, over $1.1 billion a year just to maintain the same leverage level. That gives you a substantial amount of available powder, as you said, $1.5 billion plus every year just to maintain the same leverage level. And so I would expect that we will continue to invest meaningfully into new assets where we see the opportunities. That's our preference. Of course, we're paying our dividend. But as I mentioned, it's a fairly small percentage of what's available to us. And then we'll be opportunistic about share buybacks, too, when we see that opportunity in our stock. So all of those things will continue to be a part of our practice, and our focus has not really changed from what it's been the last several years. But we have plenty of capacity to continue to take advantage of opportunities when they pop up, and we will do that.

Looks like we've reached our allotted time. Really appreciate you being with us today, Brendan. I appreciate everyone on the line here. There are a number of one-on-ones scheduled in small groups, scheduled throughout the day. Again, everyone stay well, stay healthy. Take care of everybody, and we look forward to being together in Orlando next year to where we can get back to where we were a year ago. Hard to believe that was the last of really the big in-person events. So everyone stay well, thanks, Brendan. We look forward to being in Orlando next year. Thanks, everybody.

Thank you, Ric.