Cell Tower Lease Buyouts - What to Know

Considering selling your cell tower lease (commonly called a lease buyout)? Before you make this decision, there are some critical considerations. 

Most people who have a cell tower on their property have been approached to sell their cell tower lease. In many cases, the property owner is approached by a "Cell Tower Lease Consultant" and informed that their cell site is very risky, and can go away at any time. The recommendation is that you sell the lease now in exchange for a one-time payment; following which the buyout company collects the rent for as long as the tenants stay on the property.

Many people who have either sold leases, or are considering selling leases have asked us if the cell site on their property is really at risk. The answer is maybe.

The risk of a cell site being taken down, or decommissioned, is based on many factors; including the quality of the tenant, the importance of the site to the network of the existing tenant and other current or potential tenants, and the your lease. As most property owners do not have access to this type of information, the assistance of an independent, landlord focused cell site lease consultant may be a good investment.

Read more: Cell Tower Lease Buyouts - What to Know

Small Cell Antenna Installation Considerations

Street Light 3Small Cells are currently a hot topic in the wireless community, and are becoming a topic of interest for local governments. A small cell is just like it sounds - a small cellular antenna, typically designed to provide cellular coverage to a smaller geographic area than a cell tower or full rooftop cell site. While many small cells are installed on utility poles or street and traffic lights; small cells can be installed almost anywhere power can be placed. Most prefer to have fiber installed as well, however there are varying methods of "backhaul" (transferring the received signals back to the network).

As these placements require approval of local governments, the approval process is currently hot topic within the small cell industry. In some areas state or federal regulations differ from local requirements. Until some consistency can be implemented to address concerns of local governements while serving the needs of the wireless carriers; it is anticipated that the permitting process will be a source of frustration for both local governments and cellular providers for the forseeable future.

From the standpoint of the local goverments and utility companies, many items need to be addressed in small cell installations, including:

  1. Small Cell Aesthetics.Street Light
  2. Small Cell Equipment Placement.
  3. Capacity of Pole/Light Post to Support Small Cells.
  4. Growth/Change of Small Cells Over Time.
  5. Utilities Needed to Serve Small Cells.
  6. Application Intake Procedures for Small Cell Use and Building Permits.

Read more: Small Cell Antenna Installation Considerations

Radio Frequency "RF" Radiation Reports

While many people express concerns about radio frequency (RF) radiation or emissions, not many property owners are aware that analyses are regularly performed to show the anticipated RF levels at certain points on their properties.

While measuring RF levels is a challenge due to many factors, computer modeling has come a long way in recent years to show the RF path emitted from antennas, and its penetration levels within a building. NIER Overlay

A challenge we regularly see with this report is the "points of interest" (POI) or points of measurement that are used to run the report. Wireless carriers typically will select two POIs; the rooftop, and the ground level. This leaves all levels within the building unmeasured.

Property owners rarely, if ever, see these reports. In our view, these reports go a long way to answering questions that property owners may have themselves, or that they may be asked about the effects of the antennas on occupants of their buildings. Additionally, these reports could also be utilized to show that many concerns raised by tenants or neighbors of the building are unfounded.

The reports will typically model the estimated propagation pattern for each antenna on the rooftop, displayed at maximum power. This allows the wireless carrier and property owner to identify "Controlled Areas" where only trained professionals should work, vs. "Uncontrolled Areas" where low levels of RF may exist at levels that have been determined to be safe by the FCC for the general public.

Read more: Radio Frequency "RF" Radiation Reports

Cell Tower Companys & Cell Tower Lease Renewals

Many people contact Gunnerson Consulting to ask if they should accept an offer to extend their cell tower lease. Our answer is typically: Absolutely - when the situation is right!

In the past few years, many property owners have seen their cell tower tenant change from a wireless carrier (i.e. Verizon, AT&T, T-Mobile, Sprint, etc) to a cell tower company (i.e. American Tower, Crown Castle, SBA, etc). Most tower companies have entire departments focused only on requesting lease extensions from their landlords.

The typical model in approaching a cell tower landlord is to send a letter to the property owner requesting a lease extension. This letter is followed by a phone call from a representative asking if the property owner is interested in renewing the lease.

If a property owner is interested in renewing the lease, the tower company typically proposes the terms. Most property owners are not in a position to know if the rates and lease terms offered by the tower company are reasonable. Many property owners simply accept the first offer from the cell tower company to renew the cell tower lease - without understanding how their lease compares to the overall market. In our experience, the lease extension documents typically also include terms that are not part of the current lease, and may change the value of your lease over time.

Read more: Cell Tower Companys & Cell Tower Lease Renewals

Should I Renew My Cell Tower Lease Right Now?

If the cell tower on your property has recently been sold to a tower company, you have tower skybeen contacted about renewing your cell tower lease. Cell tower companies who have purchased portfolios of cell towers have staffed up entire departments of agents who are aggressively contacting current landlords with two offers:

  1. They will purchase either a lease assignment or long term easement on your land with a one-time payment. (Lease buyout)
  2. They will extend your lease for decades with few changes to your current lease. (Lease extension)

From the cell tower company perspective, either a cell tower lease extension or cell tower lease buyout is "good business". Securing the cell tower lease now provides the cell tower company with the most flexibility, and prevents the cell tower company from being in a poor negotiating position in the future. Any landlord who agrees to extend their cell tower lease based on the terms offered will be a "fixed cost" for decades to come. Any cell tower landlord who does not agree to extend their lease now can be approached again in the future. There is litte downside to the cell tower company under this approach.

Read more: Should I Renew My Cell Tower Lease Right Now?

Cell Tower Leases Rates: Effects of "Small" Changes

A hot topic in the cell tower infrastructure industry today is cell tower lease negotiations. Whether you are negotiating the initial cell tower lease rates to add a new cell tower or antenna site to your property, or renegotiating an existing cell tower lease, you will face decisions that may seem insignificant, but could change the gross revenue received from your cell tower lease by tens of thousands of dollars.

Gunnerson Consulting has created proprietary tools to assist property owners in determining the fair value of their cell tower lease. We created one of the largest independent databases of cell sites in the nation and our group has over 70 years of combined experience in the wireless industry. This gives us unparalleled experience that we use to assist our customers with cell tower lease rate negotiations.

One tool we created allows us to analyze the impact of different initial cell tower lease rate with varying rates of escalation (or cost of living adjustments). Below are a couple of examples of how cell tower lease rates and gross revenue are affected by different scenarios. Keep in mind that these are very basic scenarios which omits a number of variables that could impact the value or duration of the cell tower lease.

Scenario 1: Different Rent, Different Escalation:

Higher cell tower rent is always better, right? Wrong! Many times during lease negotiations, customers will accept slightly higher cell tower rent in exchange for a reduced rate of escalation.

In the following example, we compare the difference between three different cell tower lease rates combined with varying escalation as follows:

Read more: Cell Tower Leases Rates: Effects of "Small" Changes

Cell Tower Lease Buyouts

If you have a cell tower lease or a rooftop antenna site lease on your property, you have been contacted about selling the cell tower lease. For property owners who have decided that a cell tower lease buyout is right for them, the amount of money received is only part of this transaction.

There are many different factors that need to be incorporated into any cell tower lease buyout transaction. The company buying the lease will require a long term agreement that will impact the property owners ability to use portions of the property. It is critical to understand what the long term impacts are when transferring a lease.

Some considerations are:

  • What are the access rights/requirements?
  • Are additional rights needed beyond those granted in the lease?
  • Is the price fair?
  • Are there different tax implications based on the structure of the purchase?
  • If additional tenants or rent are promised as a part of the offer, when will that income be realized?
    • Is it even probable that the buyer will add tenants?
  • What happens if the property is redeveloped?
  • If there is a problem with the tenants after the sale is completed, what options are available to the property owner to resolve the problem?
  • Rooftop sites add additional layers of complexity, and each site is different.

Gunnerson Consulting has experience with all aspects of the lease buyout market. because we do not buy leases, we can help you make sense of lease buyout offers and can explain the differences between the many options available, including lease assignments, sale of an easement, non-recourse loans, or pre-paid leases. As an added benefit, every customer we have assisted in a lease buyout transaction has seen a significant increase in the lease buyout price!

By looking at your goals, and developing a solution that is specific to your needs, GCCSS provides the best solution - custom tailored to you. Our method of handling lease buyouts has been proven to increase the overall benefit to customers who decide to sell their wireless leases. If you are contemplating a cell tower or antenna site lease buyout, it is well worth your time to contact us for a review of the situation.