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.

What Is a Cell Tower Lease Buyout?

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.

Is Your Cell Site Really at Risk?

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 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.

Why an Independent, Landlord-Focused Review Matters

In our experience, very few representatives from the lease buyout companies have the expertise to perform a thorough analysis of the risk of a cell site. Additionally, in cases where severe risk does exist, the amount the buyout company will pay for your lease is severely discounted – if they will make an offer at all.

Weighing a Lump Sum Against Future Rent

Comparing a buyout offer to your future rent isn’t just a matter of adding up the years of payments you’d otherwise receive. Money today is generally worth more than the same amount spread out over time, and your own goals – whether that’s simplifying your finances now or holding onto a long-term income stream – matter as much as the math. It’s worth getting more than one opinion before deciding which side of that trade-off makes sense for you.

What a Buyout Process Usually Looks Like

Buyout deals tend to move through a similar sequence: an initial offer or letter of intent, sometimes an exclusivity period while the buyer does its homework, a review of your lease and title, and then negotiation of the final terms before closing. The first number you’re offered is rarely the final one, and there’s usually more room to negotiate, on price and on the surrounding terms, than the initial offer suggests.

Questions Worth Asking Before You Sign

Before agreeing to a buyout, it can help to get clear answers on how long any exclusivity period lasts, whether a right of first refusal or similar clause applies, what restrictions follow you after closing, and exactly which rights – access, expansion, easement – are actually changing hands. These are the details that tend to matter more, over time, than the headline number.

A Note on Taxes

A lease buyout can carry different tax consequences than ongoing rental income, and the right treatment depends on how your particular deal is structured. This is one area where it’s worth looping in your tax advisor before signing, rather than after.

How Gunnerson Consulting Can Help

Gunnerson Consulting has substantial experience with all areas of the cellular infrastructure industry. We will review your cell site to determine areas of potential risk of your site being decommissioned. Contact Gunnerson Consulting for an independent cell site risk review to see what Gunnerson Consulting can do for you.