Good day, ladies and gentlemen. And welcome to the Fourth Quarter and Year End 2015 Financial Results CSAL Earnings Conference Call. My name is Bridget, and I will be the operator assisting you with your call today. At this time, all participants are in a listen-only mode. Participants on the call will have the opportunity to ask questions following the Company’s prepared comments. [Operator Instructions] As a reminder this conference call is being recorded. I would now like to turn the call over to Mark Wallace, the Company’s Executive Vice President, Chief Financial Officer and Treasurer for opening remarks. Please go ahead Mr. Wallace.

Thank you, and good morning everyone. Before we start, I’d like to remind you that our discussions during this conference call will include forward-looking statements and actual results could differ materially from those projected in these statements. The factors that could cause actual results to differ are discussed in our filings with the Securities and Exchange Commission. Discussions during the call will also include certain financial measures that were not prepared in accordance with Generally Accepted Accounting Principles. Reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our current report on Form 8-K dated today. I will now turn the call over to Kenny Gunderman, our President and Chief Executive Officer.

Thank you Mark, and good morning everyone, and thank you for joining us. As we approach our first year anniversary of being a public company, I thought we would begin with a brief review of our strategy, an update of our progress and our outlook for 2016. We believe we are the only REIT focused on acquiring or building mission critical infrastructure in all key telecom real estate asset classes. We also believe we're the only telecom infrastructure company with the ability to operate these assets or own them in a passive way in order to best serve our customers’ needs. We have based our strategy and the direction of our company around these significant advantages. Essentially our goal is to become the first diversified communications infrastructure REIT and we expect to make continued substantial progress towards that goal this year. We continue to see service providers and content providers increasingly prioritizing their capital towards new technology and service offerings and away from owning telecom infrastructure. We believe that as a REIT we are uniquely positioned to be a long-term capital partner to these customers to provide a telecom infrastructure in a carrier neutral tailored fashion. And as we build a diversified portfolio of communications infrastructure assets and diversify our contractual lease arrangements with creditworthy customers, we will not only deliver a predictable growing dividend, but the value of our underlying assets and enterprise will appreciate as well. On January 7th of this year, we announced acquisition of PEG Bandwidth, which fits squarely within our strategy. PEG is a provider of fiber-to-the-tower, which is not only critical structure, but there is a convergence of these assets with other of our targeted asset classes such as towers and tower real estate. In addition, we will be directly serving three of the…

Thanks Kenny. This morning, we reported FFO before transaction cost of $0.65 per diluted common share for the fourth quarter and AFFO of $0.65 per diluted common share. Net income attributable to common shares was $6.8 million or $0.05 per diluted share. Consolidated revenues were $173.9 million with consolidated adjusted EBITDA of $166 million. Leasing segment revenues were $167.5 million including $4.3 million of straight-line rental income. Revenues from Talk America were $6.4 million, with adjusted EBITDA of $1.6 million. G&A expense for the quarter was $3.8 million including $800,000 of non-cash stock-based compensation expense. Interest expense was $66.5 million, cash interest expense was $62.8 million. Late in the fourth quarter, we funded $43 million of capital expenditures for Windstream under a previous commitment to fund up to $50 million in 2015. The lease rate on that investment is eight and one-eight, and that investment would generate about $3.5 million in annual cash rent going forward. We continue to have substantial liquidity at quarter end with $142.5 million of unrestricted cash and cash equivalents and $500 million of undrawn borrowing capacity under our revolving credit facility. Our leverage ratio was 5.5 times based on debt to annualize adjusted EBITDA and 5.3 times based on net debt to annualized adjusted EBITDA. Earlier this week, we announced that our Board of Directors declared a regular quarterly cash dividend of $0.60 per share, payable April 15, 2016 to stockholders of record on March 31, 2016, this represents an annual dividend rate of $2.40 per share. Turning now to our guidance for 2016, we expect FFO per diluted common share to range between $2.56 to $2.58 and AFFO per diluted common shares to range between $2.57 and $2.59. Let me give you some of the components of our 2016 guidance. First, starting with leasing…

Thank you. [Operator Instructions] Our first question is from David Barden with Bank of America. Your line is open.

Hey guys thanks. Pretty straightforward quarter as expected. I guess, maybe Kenny, I wanted to kind of revisit one aspect of the PEG transaction, which was the ongoing direct equity stake and then convertible preferred stake that Associated Partners is assuming in CSAL, which is guess is convertible $35 a share. Two pieces of question; part number one is, my understanding is that this investment that Associated Partners made into PEG was originally a portfolio investment that they were making on behalf of KKR, and so I was wondering if you kind of describe any relationship that there may exist now via Associated Partners with KKR. And the second would be, as this negotiating process went along and Associate Partners was deciding to take this equity position, what kind of look under the hood where they allowed to get, did they just take this at face value or did they come in and kind of really tear apart the CSAL books in the pipeline, and say, you know look I want to buy into that as well. So if you could give us some color around that, it will be super helpful. Thanks.

Sure, and good morning Dave, and thank you for the questions. But with respect to the first question, actually KKR was a minority investor with Associated Partners. So they were an investor in Associated Partners funds and various portfolio companies, so Associated was really the lead investor here. Secondly, and to your question about Associateds' look under the hood, they got a very substantial look under the hood, so substantial amount of due diligence, substantial amount of interaction with our management team even with our board and so they certainly didn't take the investment at face value at all. And in fact I think, I know we've said this publicly before, but when you think about the consideration that we’re paying for PEG, the cash portion is actually being used to retire debt and other obligations, the amount of consideration in going to Associated is all in the form of CSAL equity or the preferred. So there actually – based upon their look under the hood, I think they're taking a big bet on us given that they’re taking all their consideration in equity essentially.

And can you remind us of the lock ups on the two different pieces?

To lock up, the comment is two years, and then on the preferred there is three-year non-call period.

Got it. Alright guys. Thanks much.

Sure.

Our next question is from Barry McCarver with Stephens Incorporated. Your line is open.

Hey good morning guys. Thanks for taking my question. I guess, first off on PEG, do you expect to update your guidance for the year once that deal does close, and then in addition to that just – I wondered if you could give a little more color on what you think the organic opportunities there might be this year just in terms of CapEx?

Barry, this is Mark. So yes, we definitely intend to update the guidance once the transaction closes. I can’t give you the exact date or time or format yet, but we do – we will be updating the guidance once the transaction closes. And anything to do with CapEx requirements regarding PEG going forward, we’ll do that at that time.

Okay, fair enough. And then just in terms of any CapEx you might be providing to Windstream in 2016, do you anticipate any of the potential $50 million going in that direction?

No, so we haven’t had any additional request from Windstream to provide capital. As you know, we don’t have any commitments outstanding to provide capital Windstream in 2016 and we’ve had no request.

Alright. And then I guess my last one, this is for Kenny, you talked about the robust pipeline, any change in kind of the activity that you see today versus maybe before you did the PEG deal or last year companies or partners starting to loosen up?

Yeah Barry, good morning. I’d say the activity level is higher than it was last year. I'd say, more important, however the quality of the opportunities in the pipeline has never been better. And I think from our perspective we focused less and less upon how many opportunities are in there versus really focusing on prioritizing the opportunities that are a good fit from an asset perspective with our strategy, and a good fit from the standpoint of the quality of the counterparty and a good fit from the standpoint of action-ability. And so to your question about activity I would say we’re more focused on execution than we are on adding new opportunities. I really think one of the great misconceptions about us is that is that we struggle to find good actionable opportunities and that's really not the case at all. I mean, I think we’re – we have no problems getting opportunities into our sales funnel. There is a huge opportunity out there and a number of interested counterparties, but one of the things that most excites us about where we are today is that, I feel like we have a good sense of the opportunity set and we’re very focused on the opportunities that we think fit the best from our standpoint from the standpoint of asset fit, quality of the counterparty, and action-ability.

And Kenny, not to put too finer point on it, but just your comments about the quality of the deal from the pipeline, are those deals that you didn't have last year or you didn’t have at some period in the past that are new or even the quality is better, just because you’ve – focus more on specific deals?

Yeah, Barry, I’d say it’s both. Some of the opportunities are ones that we started working on last year and when you consider that, the types of conversations that we’re having are very strategic. In some cases, opportunities take time to nurture along and get to the finish line, and so some of them started last year, but frankly some of them did start after the PEG announcement. I think that did help shine a light on our strategy with a lot of focus on telecom, and I think it did help accelerate some of the opportunities.

That’s very helpful. Thanks a lot guys.

Our next question is from Eric Pan with JP Morgan. Your line is open.

Hey guys thanks for taking the questions. Maybe a little more color on PEG. Maybe you can help us think about the growth rate or potential growth rate there, is it growing in the high double digits, low digits, single digits, and then how long do you think it will take before you can transition most of the revenue at PEG from lit to [indiscernible]?

Yeah, I think Eric on to your second question, there will be – we’ll have more to say on that in the coming months with specifics, but I'll tell you that one of our rationale for acquiring PEG is that we do see a transition in the industry towards more dark fiber versus lit services, and I think that from what we’ve seen so far, we haven’t been surprised. We've been encouraged by the trends that we’re seeing, so there will be more to talk about there. I will say that although that trend is as expected if not maybe accelerating, we are not opposed to lit services. We have plenty of capacity in our TRS for lit services, and as you know there's a trade-off between lit services and dark fiber longer-term contracts versus higher returns potentially. So we’re certainly not opposed to lit services. With respect to your first question, I think that we definitely believe that there is opportunity for growth at PEG. We’ve talked about what their historical growth rates have been, but we also believe that – we’re planning to make investments in the business in the near-term to set the business up for growth longer-term. And so we’ll have more to say more about that once the deal closes, we’re trying not to be to presumptuous, but we’ll have a lot more to say about all that once the deal closes.

Got it. And then, the acquisition, diversify revenues by about 10% due to the – relative to the higher multiple that was paid, your ultimate goal is revenue diversification, are you now looking more at the yields with lower multiples, that allows for greater diversification with lower capital outlay?

Yeah, I think, Eric, there is a lot of different things that we’re looking at. You know, if you look at just PEG alone, first of all on the multiple, we really think we paid a low multiple relative to where some of the other private market transactions have occurred, but we don't view PEG as just a one shot thing, there is going to be organic growth opportunities to grow PEG with some of these key anchor customers. And when you look at the returns on those organic investments if you were to translate those to a multiple or to a cap rate, they would be substantially better than for example the multiple that we paid for the enterprise itself, so that's one. Two, those types of opportunities exist outside of PEG, so those types – the opportunities to build network for other operator or service providers exist and exist at attractive returns. And when we look at some of the opportunities in our pipeline they are not all buying companies or one single sale-leaseback, many of the opportunities are deploying some capital initially, but that capital grows over time with a potential service provider. And so you look at the returns over a longer period of time as opposed to just upfront. But then lastly, as it relates to businesses, and businesses in the asset classes that we’re targeting, the multiples are double digits plus, and so there are those types of opportunities in the pipeline that we’re looking at and we’ll continue to look at.

So with roughly $200 million to $300 million left on your revolving cash position, how much more firepower do you think you have before you need to start looking at the capital markets again?

This is Mark. So you’re right, so we’ve got $640 million today, post PEG we’ll have liquidity of about $320 million remaining between cash on our balance sheet and our revolver. Look I mean, I think the capital markets have clearly been volatile – we want to be prudent given the recent volatility that’s been experienced. And I think I’d that we’re in a fortunate position today of having – still having substantial liquidity and not needing to return to the capital markets in the near-term. That said I think we’ve had a very good reception to the PEG transaction. I think I do continue to believe our cost of capital will improve over time, and as we execute against our pipeline and announced future transactions, and so I think it’s going to be – will be depended on what we announced in the future and how the capital markets playout.

Got you. Thank you.

Our next question is from Frank Louthan with Raymond James. Your line is open.

Great. Thank you. Just a little bit more on the pipeline, has there been an evolution of the type of assets that have come to you, and anything particularly different and maybe the initial inquiries you saw right after the spin, and then quite a few data center assets out in the market, in particular some that might be sort of one-off, may be less attractive to larger players, those kind of things. One or two isolated locations, just to be clear is that the kind of thing on the radar?

Good morning, Frank. Yeah, so there has been an evolution. I think initially there was a lot of focus from the marketplace and from counterparties on I like related assets, more consumer broadband type assets for us, just simply the fact that we’re spun out of Windstream and we own a lot of those assets initially, there was just a lot of focus on that. But from our perspective, our focus has been on the assets that we’re focusing on now and I think it's taken some time for the industry to realize that. But that has happened, and so today if you look at what's in our pipeline and look at where we’re spending the vast, vast majority of our time it is on the assets that we’re talking about, as opposed to consumer broadband. So that's been a very good thing. It’s taken some time and it took the summer of 2015 for us to do that, but it is now happened and we’re very excited about it, and it’s one of the reasons we’re so bullish on the opportunity set today. As it relates to – what was your second question, Frank?

Well just on, yeah, sort of single location datacenters and so forth, is that – wheelhouse a well?

Datacenters are on the list, we’re looking at data centers. I will tell you, it's less of a focus many of the data centers that we see are either part of a broader process where there is a lot of parties looking at those and that's not ideal for us. I think, as we’ve talked about 90% plus of our conversations are more bilateral in nature, that’s a better fit for our model. And secondly, data center valuations are – seem high from our perspective. So it's been – those assets have been less of a focus recently.

Okay. And just one follow up on the ILEC type assets, with your conversations with folks in that world, how much of that process is being delayed or those sort of decisions being delayed until the ultra-high cost fund gets settled out and the CAF-II money gets settled out before they make decisions, do you think that could be a catalyst potentially for some sellers, once the winners and losers are kind of identified through that process?

Frank, good question. Honestly I don’t know the answer to that question, other than to say the delay is – I would say, the delay is probably more from our perspective than it is from the counterparties perspective, if that make sense.

That’s great. Okay. That’s very helpful. Thank you.

Our next question is from James Moorman with DA Davidson. Your line is open.

Yeah, thanks for taking my question. First on the PEG Bandwidth, do you feel – the growth that you feel that you can add through doing additional deals do you think this is something that – because they might have been capital constrained or is there other things that you bring that enable you to kind of unlock that growth? And then in terms of deal pipeline, do you feel while doing the PEG Bandwidth deal has brought you more attention, do you think it also potentially brought you anymore competition from people that may not have taken you seriously on what you're going to be doing now, like alright, we have somebody that’s really going to look to acquire companies?

James, I think on the first question. I think there is a lot of different benefits that PEG brings to us and that we bring to PEG frankly, that are not necessarily quantifiable in a growth number because I think it’s very critical to remember that the business brings three very large customers and an anchor relationship with those customers that we think is scalable well beyond where they are today, not just within PEG, but beyond. So I think that's a big benefit us. Second benefit to us is going forward having a platform to make incremental acquisitions and eventually benefit from M&A type synergies will be very beneficial. But I do think, directly to your question we’re sizable company with substantial amount of capital, and I think the scalability of PEG in a vacuum beyond what they have had historically is likely there, and that was definitely one of our considerations. So I would say yes.

And then just on the other one. Do you feel that, while it's bringing you more deals doing the PEG Bandwidth deal do you feel that kind of made some parties, maybe it increased maybe the competition for deals?

I can’t say for sure, because can’t ourselves on others minds, but I will say James that our mix of bilateral conversations versus auction type situations hasn't changed. The dialogues that we were in before PEG, many of them have continued and we’ve continued to add new proprietary bilateral -type discussions into our mix.

Great. Thanks a lot.

Thank you. And we have one more question from Arun Seshadri with Credit Suisse. Your line is open.

Yeah, hi guys. Thank you for taking my questions. Just a couple, first, I just wanted to ask as far as the percentages you usually give out in terms of the pipeline and sale-leaseback versus whole company and CapEx, are you willing to give that same sort of color this time?

Sure, Arun. In terms of the asset mix, it’s roughly – and again, this is a living breathing number, but today it's roughly 60% fiber, roughly 40% towers and tower -related real estate. And with respect to the mix of the type of opportunities, it's roughly 50% sale-leaseback's, about 40% whole company opportunities, and then 10% other, which is sort of CapEx and CapEx related programs.

Okay great. Thank you for that. And then, is there any way you can sort of talk about the next sort of couple of deals, sort of whether you can characterize them and whether they be eligible for the qualified REIT subsidiary versus taxable REIT subsidiary?

Yeah, it’s hard to say Arun, but I think the vast majority of what we’re looking at are fits for the QRS versus the TRS longer-term. And for some of the opportunities there may be a temporary stop in the TRS, but that doesn't mean that over time yes it won’t be transitioned into the QRS. I think – we’re focused on the assets that we’re focused on because they're all generally readable assets. And Mark, I don’t know if you want to add to that.

As we tried to explain with the PEG transition as well kind of the way we can use the TRS by putting on security in the company mortgage notes, in many cases that gives us a lot of the benefits of having the assets in the TRS that we would have realized in the QRS as well. So assets that go into TRS can also be relatively tax efficient as well.

Got it. That’s helpful. Thank you. And finally, as far as the headcount, I think you talked about the areas – you talk generally that you’re continuing to expand headcount, just wanted to get a sense for what areas you are sort of – what type of, how many people are you hiring and sort of what type of skill sets? Thanks.

Good question, Arun. So the vast majority of the people that we’re looking to bring on are deal-related, so corporate development predominantly and then other areas that support the deal function for us.

Great, thanks.

Sure.

I’m not showing any further questions in the queue. I will now turn the call back over to Kenny Gunderman for closing remarks.

Thank you. And thank you for joining us this morning. We very much appreciate your interest in CS&L, and I look forward to talking with you throughout the year. I would also like to thank our employees for their dedication and hard work this past year, and look forward to the PEG team joining our company in a few weeks. Thank you.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.