Performance Overview - Baron Real Estate Income Fund increased by 5.43% in Q3 2025, outperforming the MSCI US REIT Index which rose by 4.49% [2] - Since inception on December 29, 2017, the Fund's cumulative return is 97.17%, significantly higher than the REIT Index's 41.54% [2][3] Comparative Rankings - As of September 30, 2025, the Fund ranks in the 2nd, 5th, 17th, and 2nd percentiles for the 1-, 3-, 5-year, and since inception periods, respectively, according to Morningstar [4] - The Fund's Institutional Share Class is ranked as the 3rd, 10th, 28th, and 2nd best performing share class in its category for the same periods [4] Market Outlook - The Fund remains optimistic about public real estate prospects, expecting improving business fundamentals and values to contribute to attractive returns [9] - Positive comments from executives of leading real estate companies indicate a potential improvement in real estate fundamentals [12][13][14][15][16] Investment Strategy - The Fund's portfolio consists of 75% REITs, 22% non-REIT real estate companies, and 3.1% cash and cash equivalents as of September 30, 2025 [21] - The Fund's investment approach includes a focus on both REITs and non-REIT real estate companies, allowing for flexibility in capitalizing on market opportunities [20] Sector Analysis - Industrial REITs represent the largest exposure in the Fund, with a positive outlook driven by demand/supply dynamics and e-commerce growth [23] - Health Care REITs and senior housing are expected to benefit from favorable demographic trends and improving fundamentals [27] - The Fund maintains a cautious but optimistic view on office REITs, identifying specific markets with potential for growth [27] Recent Activity - The Fund initiated positions in Jones Lang LaSalle Incorporated and increased holdings in Prologis, Inc. and The Macerich Company during Q3 2025 [44][46][47] - The Fund trimmed its exposure to certain holdings like American Tower Corporation and Equinix, Inc. due to market conditions and growth outlooks [41][49] Future Prospects - The Fund anticipates a pivotal moment for real estate, with expectations of solid growth in business fundamentals and potential for improved valuations [54] - The overall sentiment in the real estate market is cautiously optimistic, with expectations of continued demand exceeding supply [51]

Group 1 - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - Earnings season presents opportunities for value investors due to market reactions based on short-term thinking [2] - Defensive stocks are emphasized for medium- to long-term investment horizons [2]

Core Industry Insights - Mobile data consumption in the U.S. is projected to increase by approximately 35% year-over-year in 2024, continuing a trend of doubling every 2 to 3 years, necessitating a significant increase in network capacity and cell sites [1][60] - The tower industry benefits from financially strong customers who invest in their networks to meet rising mobile data demand, driving greater demand for tower portfolios [2][10] - The demand for mobile data is expected to continue rising rapidly, with a need for network densification and expansion to accommodate this growth [5][60] Financial Performance - The company reported a nearly 8% year-over-year growth in total revenue, driven by strong organic growth and contributions from U.S. services and CoreSite [13][14] - Attributable AFFO per share as adjusted grew approximately 10% year-over-year, supported by robust EBITDA growth and disciplined cost management [14][17] - The company raised its full-year outlook across key financial metrics, including property revenue and adjusted EBITDA, primarily due to favorable FX impacts and U.S. services outperformance [18][21] Strategic Initiatives - The company is focused on optimizing long-term value creation through strategic priorities such as maximizing organic growth, expanding margins, and disciplined capital allocation [10][12] - The company has generated approximately 300 basis points of adjusted EBITDA margin expansion since 2020, with expectations for continued improvements [11][39] - A capital plan for 2025 includes approximately $3.2 billion in dividends and $1.7 billion in capital expenditures, with a focus on developed markets [23][56] Market Trends and Opportunities - The company is optimistic about the opportunities presented by AI-driven mobile data demand and is closely monitoring developments in satellite-based networks [5][60] - Leasing activity remains robust, with approximately 75% of towers upgraded with 5G equipment, indicating significant growth potential as carriers complete their 5G rollouts [6][10] - The international market is also seeing strong investment in 4G and 5G networks, particularly in emerging markets, positioning the company for future growth [7][10] Customer and Competitive Landscape - The company has a modest exposure to UScellular, representing less than 1% of U.S. revenue, with a significant portion up for renewal next year [48] - The company is currently engaged in a legal dispute with AT&T Mexico regarding tower rent calculations, with expectations to prevail in arbitration [19][20] - The company remains disciplined in capital allocation, prioritizing dividends and internal CapEx while evaluating M&A opportunities against share buybacks [56][57]

Financial Performance - Total revenues for the three months ended September 30, 2025, increased by 8% to $2,717.4 million compared to $2,522.3 million in the same period of 2024 [195]. - The Africa & Asia-Pacific property segment revenue grew by 23% to $370.8 million, driven by a $21.7 million increase from foreign currency translation [195][196]. - Europe property segment revenue increased by 14% to $243.6 million, with tenant billings growth of $49.7 million primarily from colocations and amendments [197]. - Services segment revenue surged by 93% to $101.1 million, mainly due to increased construction management and site application services [195][199]. - Total property revenue for the nine months ended September 30, 2025, rose by 2% to $7,631.9 million compared to $7,449.6 million in 2024 [195]. - U.S. & Canada property segment revenue slightly decreased by 1% to $3,924.2 million for the nine months ended September 30, 2025 [195]. - Data Centers segment revenue grew by 14% to $266.6 million for the three months ended September 30, 2025 [195]. - The company reported a gross margin of $1,473.3 million for the three months ended September 30, 2025, compared to $1,381.5 million in 2024, reflecting a growth in operational efficiency [242]. - For the nine months ended September 30, 2025, the total gross margin was $4,454.4 million, compared to $4,245.5 million for the same period in 2024, reflecting an increase of approximately 4.9% [243]. Income and Expenses - The net income for the three months ended September 30, 2025, was $912.6 million, a significant increase of 217% from a loss of $780.4 million in 2024 [228]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $5.3 billion, representing a 4% increase from $5.1 billion in 2024 [228]. - The income tax provision for the three months ended September 30, 2025, was $37.4 million, a decrease of 69% compared to $122.4 million in 2024 [219]. - The effective tax rate for the nine months ended September 30, 2025, was 13.8%, compared to 12.6% in 2024 [219]. - Total selling, general, administrative and development expense (SG&A) for the three months ended September 30, 2025, was $233.0 million, a 2% increase from the prior year [208]. - Depreciation, amortization, and accretion expense for the three months ended September 30, 2025, was $522.9 million, a 5% increase from the prior year [215]. - Total other expense for the three months ended September 30, 2025, was $283.3 million, a 52% decrease compared to the previous year [217]. Legal and Disputes - The company incurred approximately $19 million of reserves through the third quarter of 2025 related to a legal dispute with AT&T Mexico, expecting a total of $30 million for the full year [183]. - The Arbitration with AT&T Mexico is scheduled for a hearing in August 2026, with the company confident in the enforceability of the Master Lease Agreement [183]. Capital Expenditures and Investments - Total capital expenditures for the nine months ended September 30, 2025, were $1,128.8 million, with significant investments in discretionary capital projects and data center assets [254]. - The company expects total capital expenditures for 2025 to range between $1,620 million and $1,730 million, including approximately $600 million anticipated for data center assets [258]. - Capital improvement capital expenditures for the three months ended September 30, 2025, were $48.4 million, an increase of 32% from $36.8 million in 2024 [242]. - Significant investing activities included the construction of 1,309 communications sites globally, with approximately $378.4 million spent related to data center assets [254]. Debt and Liquidity - As of September 30, 2025, total liquidity amounted to $10,654.6 million, which includes $1,950.7 million in cash and cash equivalents [246]. - As of September 30, 2025, the company had total outstanding indebtedness of $37.5 billion, with a current portion of $2.4 billion [249]. - During the nine months ended September 30, 2025, the company made net borrowings of $405.0 million under the 2021 Credit Facility [246]. - The company repaid $3,206.2 million in senior notes during the nine months ended September 30, 2025, compared to $2,150.0 million in 2024 [259]. - The company plans to continue its international expansion efforts primarily through a combination of cash on hand, intercompany debt, and equity contributions [248]. Shareholder Distributions - The company has distributed approximately $22.9 billion to common stockholders, including a distribution of $1.70 per share, totaling $796.1 million, paid on October 20, 2025 [291][292]. - The company has no amounts remaining under the 2011 Buyback program and repurchased 151,133 shares for approximately $28.0 million under the 2017 Buyback program [287]. Foreign Currency and Interest Rates - For the nine months ended September 30, 2025, 31% of revenues and 39% of total operating expenses were denominated in foreign currencies [317]. - A 10% increase in current interest rates would result in an additional $8.8 million of interest expense for the nine months ended September 30, 2025 [316]. - An adverse change of 10% in foreign currency exchange rates for unsettled intercompany debt would result in $34.4 million of unrealized losses included in net income for the nine months ended September 30, 2025 [318]. Operational Metrics - Churn rate for tenant leases was approximately 2% of tenant billings during the nine months ended September 30, 2025 [187]. - The majority of tenant leases have initial non-cancellable terms of five to ten years, with periodic rent escalations averaging approximately 3% in the U.S. [185]. - The company has 30 operating data center facilities across 11 markets in the U.S., comprising approximately 3.6 million net rentable square feet [181]. - The company experienced a decrease in AFFO attributable to discontinued operations due to the sale of ATC TIPL, impacting overall performance for the nine months ended September 30, 2025 [239].

Core Insights - American Tower's stock is experiencing a decline despite positive third-quarter results and an increase in full-year guidance [1][2][8] Financial Performance - The company reported non-GAAP adjusted funds from operations (AFFO) of $2.78 per share on revenue of $2.72 billion for Q3, exceeding Wall Street expectations by $0.32 and $60 million respectively [4][9] - Total revenue increased by 7.7% year-over-year, while total property revenue rose by 5.9% compared to the same quarter last year [5] - AFFO grew by 5.3% year-over-year, amounting to approximately $1.3 billion [5] Guidance and Future Outlook - American Tower raised its full-year property revenue guidance to a range of $10.21 billion to $10.29 billion, reflecting a $40 million increase at the midpoint [6] - The new AFFO guidance for common stockholders is projected between $10.60 and $10.72 per share, indicating a $0.10-per-share improvement over previous forecasts [7] Market Reaction - Despite the positive earnings report and raised guidance, the stock is down 3.5% as some investors anticipated stronger performance due to significant investments in data center technologies [1][8]

Core Insights - American Tower Corporation reported third-quarter 2025 results that exceeded expectations, yet the stock experienced a decline of over 5% intra-day on Tuesday [1] Financial Performance - Revenue increased by 7.7% year over year to $2.72 billion, surpassing the consensus estimate of $2.66 billion [2] - Adjusted funds from operations (AFFO) were reported at $2.78 per share, indicating solid growth compared to the previous year [2] - Total property revenue rose by 5.9% to $2.62 billion, driven by a 5.0% organic tenant billings growth across the tower portfolio [2] - The data center business showed significant growth, with revenue increasing by 14.1% to $267 million, attributed to record retail new leasing and rising demand from hybrid-cloud and AI-related workloads [2] Profitability Metrics - Net income surged by 216.9% to $913 million, benefiting from foreign-currency losses in the prior-year period [3] - Adjusted EBITDA increased by 7.6% to $1.82 billion, maintaining steady margins at 66.8% [3] Capital Allocation and Outlook - The company maintained a disciplined capital allocation strategy, declaring a quarterly dividend of $1.70 per share, which is a 4.9% increase year over year [3] - American Tower raised its full-year 2025 outlook for property revenue, adjusted EBITDA, and AFFO per share, partly due to favorable foreign exchange movements [3]

Core Insights - American Tower Corporation (AMT) reported Q3 2025 adjusted funds from operations (AFFO) of $2.78 per share, exceeding the Zacks Consensus Estimate of $2.62 and up from $2.64 in the prior year [1][8] - Total revenues for the quarter reached $2.72 billion, surpassing the Zacks Consensus Estimate of $2.65 billion, and reflecting a year-over-year increase of 7.7% [2][8] - The stock experienced a decline of approximately 2% in early trading despite the positive earnings report [1] Financial Performance - AMT's adjusted EBITDA was $1.82 billion, representing a 7.6% increase from the previous year, with an adjusted EBITDA margin of 66.8% [3] - Property operations generated revenues of $2.62 billion, up 5.9% year-over-year, with total operating profit at $1.83 billion and an operating profit margin of 70% [4] - Service operations revenues significantly increased to $101 million from $52 million in the prior year, with an operating profit margin of 41% [5] Cash Flow and Liquidity - The company generated $1.46 billion in cash from operating activities, a slight decrease of 0.6% year-over-year, while free cash flow was $984 million, down 5.1% [6] - As of September 30, 2025, AMT had total liquidity of $10.7 billion, including $2.0 billion in cash and cash equivalents and $8.7 billion available under revolving credit facilities [6] Guidance and Outlook - AMT raised its 2025 guidance for total property revenues to a range of $10,210-$10,290 million, up from the previous range of $10,135-$10,285 million [7] - Adjusted EBITDA guidance was revised to $7,058-$7,113 million, and AFFO attributable to common stockholders is now expected in the range of $4,973-$5,028 million [9] - The AFFO per share guidance was also increased to $10.60-$10.72, compared to the prior range of $10.46-$10.65 [10] Market Position - AMT currently holds a Zacks Rank 2 (Buy), indicating a favorable outlook in the market [11]

Core Insights - American Tower (AMT) reported a revenue of $2.72 billion for the quarter ended September 2025, reflecting a year-over-year increase of 7.7% and surpassing the Zacks Consensus Estimate by 2.43% [1] - The earnings per share (EPS) for the quarter was $2.78, a significant increase from $0.89 in the same quarter last year, exceeding the consensus EPS estimate by 6.11% [1] Financial Performance - The total operating revenues for Data Centers were reported at $267 million, slightly below the average estimate of $268.01 million, but still showing a year-over-year growth of 14.1% [4] - Total operating revenues for Services reached $101.1 million, significantly exceeding the average estimate of $58.18 million, marking a year-over-year increase of 94.4% [4] - Total Property revenues amounted to $2.62 billion, surpassing the average estimate of $2.59 billion, with a year-over-year growth of 5.9% [4] Geographic Revenue Breakdown - Geographic revenues from Total International were $1.03 billion, exceeding the average estimate of $1.01 billion, with a year-over-year change of 12.3% [4] - U.S. & Canada geographic revenues were reported at $1.32 billion, matching the average estimate and showing a slight year-over-year increase of 0.1% [4] - Africa & APAC revenues reached $371 million, surpassing the average estimate of $361.43 million, with a year-over-year growth of 24.9% [4] - Latin America revenues were $417 million, closely aligning with the average estimate of $417.27 million, reflecting a year-over-year increase of 3.5% [4] - European revenues were reported at $244 million, exceeding the average estimate of $238.1 million, with a year-over-year change of 14.6% [4] Stock Performance - American Tower's shares have returned -2.5% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.6% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Financial Data and Key Metrics Changes - Total revenue grew nearly 8% year-over-year, driven by steady consolidated organic growth in the mid-single digits and strong contributions from U.S. services and CoreSite [15][16] - Adjusted EBITDA also grew nearly 8% year-over-year, complemented by 20 basis points of cash margin expansion [15] - Attributable AFFO per share as adjusted grew approximately 10% year-over-year, supported by robust EBITDA growth and disciplined management of below-the-line costs [15][16] Business Line Data and Key Metrics Changes - Consolidated property revenue grew nearly 6% year-over-year, with U.S. and Canada property revenue flat year-over-year and international property revenue growing approximately 12% year-over-year [16][17] - Data center property revenue grew over 14%, driven by record retail new leasing and consistent pricing growth [16][17] - Consolidated organic tenant billings growth was 5%, with U.S. and Canada segment growing approximately 4% organically [17] Market Data and Key Metrics Changes - Mobile data consumption in the U.S. increased approximately 35% year-over-year, indicating a strong demand for mobile data and a need for increased network capacity [8][9] - Approximately 75% of the company's towers have been upgraded with 5G equipment, with significant growth opportunities remaining as carriers complete their 5G rollouts [10] - International markets, especially in Africa and APAC, showed double-digit growth, while Europe and Latin America experienced steady mid-single-digit and low-single-digit growth, respectively [17] Company Strategy and Development Direction - The company focuses on four strategic priorities: optimizing long-term value creation, maximizing organic growth, expanding margins, and disciplined capital allocation [12][13] - The company aims to leverage its unmatched portfolio of assets to benefit from increasing mobile data consumption and demand for interconnection-rich data centers [11][24] - The capital allocation philosophy prioritizes dividends, internal CapEx, and evaluating M&A opportunities against share buybacks [65][68] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the industry landscape, highlighting the benefits of carrier consolidation and increased mobile data consumption [6][9] - The company raised its full-year outlook across key financial metrics, supported by FX tailwinds and U.S. services outperformance [15][16] - Management noted that the demand for mobile data will require a doubling in overall network capacity over the next five years, driving robust levels of leasing activity [8][9] Other Important Information - The company reached a positive interim agreement with AT&T Mexico regarding previously withheld payments, which will resume monthly payments going forward [20] - The arbitration regarding the legal dispute with AT&T Mexico is scheduled for August 2026, with expectations of future reserves until the arbitration is settled [21] Q&A Session Summary Question: Services revenue continues to come in above expectations. How does that factor into deployments in 2026? - Management noted a healthy pipeline of activity in services, indicating robust carrier activity and a continued build-out of 5G networks [26][27] Question: How are you thinking about the relevance of your tower portfolio for supporting higher frequency bands? - Management expressed excitement about new spectrum bands coming to market, emphasizing that towers will be essential for deploying these bands [31][32] Question: Can you provide details on the cost optimization program? - Management highlighted that cost efficiencies are a strategic priority, with incremental improvements expected rather than a step function change [42][44] Question: What is the outlook for the data center business? - Management indicated sustained double-digit growth is possible, driven by increased demand for hybrid cloud deployments [48][50] Question: How do you view the potential impact of new spectrum sales on densification demand? - Management stated that more spectrum typically leads to network augmentations, which are monetizable events, and emphasized the need for densification over time [71][73]

Financial Data and Key Metrics Changes - Total revenue grew nearly 8% year over year, driven by steady consolidated organic growth in the mid-single digits and strong contributions from U.S. services and CoreSite [18][19] - Adjusted EBITDA also grew nearly 8% year over year, complemented by 20 basis points of cash margin expansion [18] - Attributable AFFO per share as adjusted grew approximately 10% year over year, supported by robust EBITDA growth and disciplined management of below-the-line costs [18][20] Business Line Data and Key Metrics Changes - Consolidated property revenue grew nearly 6% year over year, with U.S. and Canada property revenue flat year over year but growing approximately 5% when excluding non-cash straight-line revenue and Sprint churn [19][20] - International property revenue grew approximately 12% year over year, and data center property revenue grew over 14%, driven by record retail new leasing and consistent pricing growth [19][20] Market Data and Key Metrics Changes - Mobile data consumption in the U.S. increased approximately 35% year over year, indicating a strong demand for mobile data and necessitating a doubling of overall network capacity over the next five years [10][11] - Approximately 75% of the company's towers have been upgraded with 5G equipment, with significant growth opportunities remaining as carriers complete their 5G rollouts [12] Company Strategy and Development Direction - The company focuses on four strategic priorities: optimizing long-term value creation, maximizing organic growth, expanding margins, and disciplined capital allocation [14][16] - The company is well-positioned to benefit from demand drivers across its tower and data center businesses, with a strong emphasis on operational excellence and cost efficiency [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the industry landscape, highlighting the benefits of carrier consolidation and the increasing demand for mobile data [9][10] - The company raised its full-year outlook across key financial metrics, supported by FX tailwinds, U.S. services outperformance, and net interest benefits [19][21] Other Important Information - The company has executed $28 million in share repurchases since the quarter-end and maintains a strong balance sheet with net leverage below five times [16][25] - The company expects to distribute approximately $3.2 billion to shareholders as a common dividend in 2025, subject to board approval [25] Q&A Session Summary Question: Services revenue performance and deployment expectations - Management noted a healthy pipeline of activity in services, indicating robust carrier activity and a positive outlook for 2026 [33][34] Question: Impact of new spectrum auctions on tower portfolio - Management expressed excitement about new spectrum bands coming to market, emphasizing that towers will be essential for deploying these higher frequency bands [36][37] Question: CoreSite pre-leasing share decline - Management clarified that the decline in pre-leasing was due to transitioning construction projects into service, not a slowdown in demand [41][43] Question: Cost optimization program details - Management highlighted ongoing efforts to improve cost efficiencies, with expectations for incremental improvements rather than a step function change [51][52] Question: EchoStar contract and future contributions - Management confirmed that EchoStar is current on payments and emphasized the importance of defending the contract through 2036 [69][70] Question: Capital allocation strategy - Management reiterated a disciplined approach to capital allocation, prioritizing dividends, internal CapEx, and evaluating M&A opportunities against share buybacks [71][74]