Evaluating Cell Tower Lease Buyouts
By Steven Kazella
Landlords of wireless leased properties contemplating a cell tower lease buyout need to determine their need for cash today vs. money in the future. Fair market value of cellular leases should to be appraised and evaluated. The problem is that your average real estate appraiser usually isn't a cell phone tower lease procurement expert. Cellular lease valuations and lease purchase offers can vary broadly depending on a number of influencing factors:
• Wireless carrier lease values
• Does the cell site allow additional carriers to pay rent
• Are the cell tower leasing terms favorable for the lease buyer
• Location of the cell tower site
• Credit worthiness of the seller
• Does the cell tower lease match the buyer's requirements
• How aggressive is the tower portfolio buyer
Unfortunately, many cell tower lease buyout offers that wireless landlords are presented with are quite low. A certain percentage of the cell tower lease purchasing financial institutions blatantly take advantage of wireless landlords, sending letters which create a sense of doubt in their minds regarding the future need for their particular site, due to advancing cellular technology and wireless carriers who may merge, causing tower leases to lose their values. They prey on the fears of landlords, and acquire cell tower leases at bare-bones prices.
It never makes sense to cash out of your cellular tower lease because you are afraid your tower may become obsolete. If your lease had no value, then they wouldn't be asking you to sell your leases. The ever-popular smart phones more and more people are using are also bandwidth hogs. Carriers need a lot more capacity to handle the load. Tuck that thought away in the back of your mind.
The better scenario which favors the cell tower landlord is when they are presented with a cellular lease purchase offer from a professional wireless lease portfolio manager representing a reputable investment group. These wireless capital investors seek to acquire specific cell tower leases to expand their portfolios. Buyout deals from wireless financial services funds will tend to offer better deals than the industry bottom feeders who flash the cash and take advantage of the uninformed landlord. However, even lease buyouts offered by the larger and established wireless lease portfolio investors who are offering outstanding deals on cellular lease buyouts need to be reviewed and evaluated.
The one big question most cell site landlords have, is what the future holds for cell tower leasing. They are weighing the options of either selling their lease leases for a lump sum, or rolling the dice to see if they will be able to collect those large monthly rent checks for the cell phone carriers. A good indicator or the future of wireless leasing is Europe, since their wireless infrastructure and networks are built out far better than cellular networks in the USA. The last time we visited, countries like the nation of Hungary, with a population of 10 million citizens had over 11 million wireless subscribers. So, the answer is, the future of leasing wireless sites long-term in the United States is good, regardless of what threatening letters some of these tower lease buyers are claiming.
What's the secret to negotiating a successful cell tower lease buyout when you swim with the sharks on Wall Street? First, understand that your wireless lease is a commodity that has value, and is probably not going to disappear tomorrow because of a new innovation or industry merger, however the rent values can still be impacted at some locations. Secondly, you can avoid dealing with the sharks altogether with the proper due diligence. Wireless landlords negotiating their lease purchase armed with this information improve their chances of walking away from the closing table with a smile.
Steve has nearly ten years of wireless site acquisition, cell site lease negotiation and wireless project management experience. He is a Partner at Tower Genius, an Idaho-based wireless lease consulting firm. Steve's firm also specializes in purchasing certain kinds of cell tower lease rental streams and makes lease buyout offers to cell tower landlords in the United States. You can find us on the web at http://www.Cell-Tower-Leases.com.
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