Many new cell tower leases, antenna site leases, or lease extensions contain a provision entitled a "Right of First Refusal" or a "ROFR". The idea behind a ROFR in a cell tower lease is that it protects your cell tower tenant from any lease buyout company who may want to buy your lease. These buyout entities then manage the lease more aggressively than most property owners.
While the underlying concept of a ROFR may be fine, there are many factors a cell tower landlord must consider before agreeing to this provision. Some sample considerations are:
- A ROFR may decrease the value of your lease to potential cell tower lease buyers.
- If you want to sell your cell tower lease when a ROFR is in effect, some lease buyout companies may not be interested in making an offer because they know that the cell tower tenant only needs to match their offer to win. This limits competition.
- Some ROFRs require notice to the tenant of ANY offer to purchase the property. The typical time frame a wireless tenant has to respond is 30 to 60 days. This means you cannot accept an offer from a potential buyer of your entire property until your cell tower tenant has decided to not execute the ROFR. Not all buyers will wait 30 to 60 days for an offer to be accepted.
- Some ROFR's are worded in a way that would require that you provide the tenant an opportunity to buy your lease following your receipt of any offer - even if the offer is unsolicited.
- Many ROFRs do not require that the cell tower company actually match the offer.
- Some ROFR provisions allow your cell tower tenant to dismiss portions of any offer that they believe are included to undermine their ability to match the offer. (i.e. revenue sharing offers on future tenants, termination rights, etc.)
- Some ROFRs may allow the cell tower company to discount any competitor offers – and you can’t stop them!
- Recent ROFRs have added provisions that allow your tenant no only to match the offer, but allow the offer to be discounted based on certain factors - even though the value of the cell tower lease buyout is typically based off the revenue from the cell tower, not any additional space.
GCCSS is a consulting group focused solely on the interests of property owners who manage cell tower leases. While we understand a wireless tenant’s desire to protect their interest in a cell site, we also understand the importance of property owners retaining the right to control their property. We have developed a mechanism that allows the cell tower tenant to be informed of any offers affecting their lease, while still allowing the property owner to control any decisions involved in selling the cell tower lease or the property as a whole. For questions regarding cell towers, rooftop antenna sites, or wireless infrastructure, please contact us.