Click here to watch the video.
If you are considering a cell tower lease buyout, you want to ensure two things. First, you need to determine if a buyout is really the best decision.
You could miss out on hundreds of thousands of dollars of rental income by agreeing to a buyout deal. Second, if a buyout is the right decision for you, then you want to get the highest possible purchase price and make sure you do not agree to any terms that could have a negative impact to you and/or your property.
Here’s what you need to know so you can take advantage of this negotiation to earn substantially more money.
What Is A Cell Tower Lease Buyout?
A cell tower buyout is a lump-sum payment to a property owner either in exchange for a tower company’s purchase a long-term right to occupy/use your property or for the right to collect rents that you are receiving under an existing cell tower lease agreement.
Cell network carriers need to continually build cell towers and antennas to enhance their communication services. Most of the telecommunication firms do not wish to buy all the pieces of land they would need to build their structures upon.
Instead, they enter into lease agreements with the owners of the properties to allow the structures to be built on the premises. With the right contract in place, the agreement can be a win-win for both parties. The firm benefits by getting the necessary structures in place, while the property owners benefit from the leases by receiving money for the use of the property.
Each contract is recorded with the local land registry. The contract acts as a reference in case any of the two parties feels that their rights are not being respected during decommissioning of the cell tower or in the acquisition of the property.
A cell tower buyout is a lump-sum payment to a property owner either in exchange for a tower company’s purchase a long-term right to occupy/use your property or for the right to collect rents that you are receiving under an existing cell tower lease agreement.
How Are Buyouts Typically Paid Out?
The majority of buyouts involve the property owner granting the tower company a long-term easement that covers a period of time that ranges from anywhere from 50 years to a perpetual right to occupy/use the property.
You may have already gotten calls and continue to get them from companies like Landmark Dividend, AP Wireless, Lease Advisors or other buyers trying to purchase your lease. Offers are often presented as a one-time cash payment that depending on the current rent you are receiving and the lease expiration date can range from hundreds of thousands to millions of dollars depending on several factors.
If you have an immediate need for cash, a buyout can be an excellent opportunity to get hold of a large amount of money quickly. We have negotiated over $300,000,000 in cell tower lease buyouts and understand the positive impact that a lump sum payment can have on an individual, church, municipality, or any land owner.
Is It Better To Extend Or Sell The Lease?
Determining whether to extend or sell your lease is unique to each person’s situation. For most people, extending the lease will give you the most value and largest amount of money over the life of the lease.
However, there are circumstances when selling the lease is in the best interest of the landowner. In those cases, it is imperative to understand the real value of your property to the tower company so that you can get the money possible while also protecting your land and your future.
The companies interested in extending or buying out your lease have only one priority: themselves.
The companies who want to extend the lease have already determined that the lease is valuable to them; does the offer being presented really reflect this?
Companies approaching you for a buyout are looking to make a profit by buying your lease contract and then reselling it. This could be a great opportunity if you wish to end the lease agreement, as long as you sell to the right party. In either case, do not undersell your lease.
What Happens After The Buyout Purchase?
Each cell tower lease buyout is handled differently. However, a common tactic used by the buyout company is to make payments that are spread out over years.
While this may seem like a good deal, it usually is not. This is simply an attempt to both use you as a bank to finance their purchase of your cell tower lease and at the same time effectively pay you less than if you accepted a one-time payment. You may also, due to the structure of a payout of the lease purchase over time, open yourself up to additional tax burdens with this arrangement that could effectively even further decrease the actual amount you clear at the end of the day.
Most buyout transactions are structured in a way that you not only lose control of your property that prohibits you from participating in the renegotiation of your cell tower lease and possible revenue share rent that you could receive from additional wireless carriers being added to the tower. Simply stated, as the tower becomes more valuable, the buyout company does not have to pay you anything because they now own the lease. It gets worst. You may not only be prohibited from participating in the upside associated with the cell tower but may still may be responsible for all or most of the obligations associated with being the landlord under a lease you no longer control.
We have unfortunately heard horror stories of people who sold their leases and had to deal with terrible experiences like these:
- They were prohibited from using their own land
- They were unable to make additions to their homes
- Roads were built on their property where they didn’t want them
- Workers were on their property without notice to work on the tower
Does A Buyout Mean You Are Selling Your Property?
No, a cell tower lease buyout is not a sale of your property it is only a grant of a right to occupy/use such property.
When you do decide to sell your lease, you’ll want to refer to your lease agreement and check its provisions concerning the following issues:
- Are you prohibited from selling your lease to a third party?
- When does the lease expire? Most lease buyers will be interested in this aspect; hence it is crucial to be clear on the topic.
- Do you have to allow the current cell tower tenant a right of first refusal (“ROFR”) prior to selling the lease?
- What responsibilities are set for you after the sale of lease rights?
What Is A Fair Price To Sell My Lease?
Each cell tower lease is different and the value of each site varies greatly. There are many factors that determine the worth of a cell tower lease.
A lease buyout offer depends on the condition of each of the following factors:
- Tenant occupying the property
- Subtenants located on the tower
- Current cell tower rent and rent escalations
- How many years remain on the lease
- The amount of space being leased
- Cell tower site location
- The type of Cell tower erected on your property
What If New Revenue Is Generated From The Tower After I Sell?
If you sell your lease directly to the tower company leasing your land, they will want to maximize their asset by adding new wireless carriers and generating additional rent from the tower. Unfortunately, most of the time, their gain will not result in additional compensation for you unless you have specifically identified this issue in your negotiations.
With wireless network expansion and the arrival of 5G, cell towers are worth more than ever to tower companies and wireless companies. This is another reason that selling your lease might not be in your best interest.
Who Are The Biggest Buyout Companies?
There are several companies in the U.S that would be interested in making a lease buyout for the cell tower on your property.
Some potential lease buyout firms include:
- Cell tower firms, such as American Tower, Crown Castle, SBA Communications, etc.
- Third party aggregators such as Landmark Dividend, Lease Advisors, Towerpoint
- Wireless carriers working thru companies, like Blackdot and MD7
- Individual investors (very rare)
How Do I Contact A Company When I’m Ready To Sell?
If you determine that you want to sell your cell tower lease, contact a cell tower lease expert to consult BEFORE you sign anything. At Vertical Consultants, we work with clients to find the best company to purchase a lease, negotiate terms on their behalf, and structure all agreements related with the transaction so that they are protected now and into the future.
Do I Need Representation?
We highly recommend representation during this process. Most cell tower lease owners do not fully understand the complexity of the process of cell tower buyouts or the real value of their lease.
We offer free consultations to review exactly how much more money you can earn; how to limit your liability exposure; and ensure you get the best terms for your cell tower lease buyout.
We have negotiated over $300,000,000 in cell tower lease buyout deals over the past decade and we never try to buy your lease from you to sell it for more money, unlike some of our competitors. Contact us today for a free consultation.
