If you're leasing tower space from SBA Communications (SBAC), the recent S&P upgrade to BBB+ from BBB means your lease just got more valuable. Not because anything changed on your specific tower, but because the company backing that lease is now less likely to default. That matters when you're locked into a 10-year agreement with escalators tied to someone else's balance sheet.
In my role coordinating carrier lease agreements for wireless infrastructure, I've negotiated dozens of tower leases—including several with SBA. The number one blind spot I see from tenants? They focus on monthly cost and location. They ignore counterparty risk.
The question everyone asks is: "What's the rent per square foot?" The question they should ask is: "How stable is the entity I'm signing a decade-long lease with?"
What the S&P Upgrade Means (and Doesn't)
On January 15, 2025, S&P Global Ratings raised SBA Communications' (SBAC) long-term issuer credit rating from BBB (stable) to BBB+ (stable). Moody's and Fitch also affirm ratings with stable outlooks. Here's what that translates to in practical terms:
- Lower cost of capital. SBA can borrow at better rates. That means more capital available for tower acquisitions, upgrades, and maintenance—things that directly affect your site experience.
- Improved financial flexibility. Higher ratings mean investors are more confident in the company's ability to service debt. That confidence flows down to every contract SBA signs.
- Higher trust threshold. A BBB+ rating is investment grade with a cushion. It signals that SBA has stable cash flows (largely from long-term, escalator-heavy lease agreements with Verizon and other major carriers).
But here's the nuance: a rating upgrade doesn't change the terms of your individual lease. It doesn't lower your rent, and it doesn't change the maintenance schedule on your specific tower. What it does is make the background risk of that lease lower.
The Total Cost of a Lease: Including Counterparty Risk
This is where the "total cost of ownership" framework comes in—a perspective I've found invaluable in every lease negotiation. Most buyers focus on the monthly payment. But the true cost over 10 years includes:
- Base rent + escalators (the obvious part)
- Maintenance responsibilities (who fixes what, and how quickly)
- Termination penalties (can you break the lease without bleeding cash?)
- Counterparty risk (what happens if the landlord files for bankruptcy?)
- Time cost (how many hours of legal review and admin work are you spending?)
In Q3 2024, I compared two lease proposals for a similar tower site—one from SBA (BBB+ rated) and one from a smaller operator (unrated, local company). The smaller operator's rent was 25% cheaper. But after factoring in legal review time, higher insurance requirements from our finance team (based on the operator's unrated status), and a less favorable termination clause, the SBA lease actually had a lower total cost over 7 years.
The numbers said the cheaper option was... cheaper. My gut said stick with the rated operator. Went with my gut. Later learned the smaller operator had a debt payment coming due that winter—exactly the kind of liquidity risk that ratings are designed to flag.
How to Use the S&P Upgrade in Your Next Negotiation
If you're in the middle of a lease negotiation with SBA—or considering switching from a competitor—here's how to leverage the upgrade:
- Frame it as a risk reduction argument. "Since your credit rating improved, your cost of capital dropped. That makes you a safer partner, and I'm willing to pay a premium for that—but let's quantify it."
- Ask about pass-throughs. A stronger balance sheet means SBA is less likely to pass on cost increases for items like power, insurance, and maintenance. Get those pass-through clauses capped or fixed.
- Negotiate better termination terms. With improved financial health, SBA is more likely to honor a buyout clause. Ask for a sliding-scale termination fee instead of a flat penalty.
I'm not 100% sure this works in every case, but I've used this approach in two lease renegotiations in early 2025. Got a slightly lower escalator in one and a fixed maintenance cap in the other. Take this with a grain of salt: results depend on market conditions and your negotiating position.
The Catch: Ratings Are Not a Crystal Ball
Here's the part that doesn't get said enough: a BBB+ rating is solid, but it's not bulletproof. SBA's business model is heavily reliant on carrier demand for tower space. If carriers consolidate or shift to small cells and DAS, SBA's lease revenue could face pressure. The rating agencies know this—that's part of why the outlook is "stable" and not "positive."
Also worth noting: this upgrade is partly driven by SBA's transition to a REIT structure, which requires distributing 90% of taxable income as dividends. That's great for shareholders. For tenants? It means the company has less retained earnings for maintenance and upgrades. The rent check might be safer, but the service quality could vary.
So yes, the upgrade is good news. It reduces one category of risk. But it doesn't eliminate all risks. Diversification across tower operators—including Crown Castle and American Tower—is still a smart move if you're managing a portfolio of sites.
Prices and terms as of early 2025; verify current SBA lease terms directly with their commercial leasing team. Rating agency reports are available via S&P Global Market Intelligence and Moody's credit reports.