Sell My Cell Tower Lease
Your stream of monthly rental income from trusted multi-billion dollar companies such as AT&T, Verizon, T-Mobile, Crown Castle, SBA, and American Tower (ATC) has a value to companies seeking to join and profit from the wireless industry. These companies want to buy out your monthly income stream for the next 50+ years, regardless if your remaining cell tower lease duration is shorter than that, in return for a lump sum cash payment to you today. The buyer’s goal is purchase your rental stream from you at as low of a price as possible, then “repackage” it to sell back to the market for a profit. This is the reason property owners are constantly receiving phone calls from companies like Landmark Dividends, Unison, Melody, Blackdot, and Md7. While this may seem like a good option to raise quick cash, it is important to consider how much profit these companies are making off your tower lease and the potential benefits and consequences before engaging in these transactions.
What Is A Cell Tower Lease Buyout?
Your cell tower lease delivers a predictable monthly income from trusted blue chip companies such as AT&T, Verizon and T-Mobile. The income escalates annually or once every 5-year term. And when the lease expires, there’s a good chance that it could be negotiated to be at a higher rent than you have been paid in the past decades. All this bodes well for buyers looking to purchase those rights in exchange for one lump sum payment to you today. This purchase transaction is commonly referred to as cell tower lease buyout, “lump sum buyout”, “cash buyout”, or “lease buy back”. Regardless of the labels, the transactions are all the same. The buyer will want to offer you as low a price as possible because this means a greater profit for them. The buyers will also want the greatest non-financial terms negotiated in their favor, such as payment terms, easement durations, expansion space, access, future income, structural loading, traffic use, utility/access rights, and the right of first refusal. You, as the property owner, will want (1) your lease exposed to as many prospective buyers as possible so you can get the highest price possible, and (2) the purchase-and-sale agreement to be negotiated well such future uses and granted property rights will not create problems for you when you operate or sell your main property in the future. This is where Terabonne is able to help property owners meet all of these requirements.
Should I Sell My Cell Tower Lease?
The decision to sell your cell tower lease should be driven by personal reasons. There are circumstances where selling your tower lease is a smart financial choice. However, the decision and their reasons should come solely from you and not from any fear or pressure from.
Cell Tower Lease Buyout – If You Want Cash Today
Property owners of tower leases receive frequent calls and unsolicited offers to purchase their cell tower leases. Unison, Landmark Dividend, Tower Point are just some of the names whose primary business practice is to purchase cell tower leases from property owners. They will then repackage and sell these same leases for a profit later. Many property owners are content with receiving monthly cell tower lease income and are not compelled to sell their leases. However, over time, situations do change and many property owners want to consider the sale of their tower leases. Events that trigger our clients wanting to receive lump sum cash buyout include their retirement, sale of the property, or needing cash for life events. Many property owners also choose to cash out before further tower consolidations. T-Mobile purchased MetroPCS. AT&T purchased Cricket Wireless. Verizon purchased Alltel. T-Mobile purchased Sprint. Sprint purchased Nextel. When these events happen, thousands of tower leases are terminated because there are duplications in coverage as tower infrastructures are combined. Property owners who sell before these events get to keep the money even though the tower leases do terminate later.
Sell Your Property Twice
If you are selling your building or land, and want to sell the tower lease income separate from the sale of the entire property; essentially selling your property twice. Suppose you own land that has a cell tower lease on it. If you are planning to sell the land in the future, a wise move is to create an easement on your land and grant yourself the perpetual rights to that easement. Then the tower income is yours forever. Now you have two assets: (1) the underlying property (real estate) and (2) the cell tower income because you own the easement. You are free to sell both assets independently, in any order you wish. This is what we helped Luis Ornelas, a commercial property owner in La Habra, California, accomplished in order to retain the rental income for life while selling the main parcel to a real estate developer. We can help you do the same also if selling the land is part of your future plans.
Risk of Lease Termination and Loss of Income
Many property owners assume that wireless carriers can’t terminate their lease before its expiration. However, 99% of the time, wireless carriers can. Typically, your cell tower lease has a five-year term defined that the carrier can extend automatically every five years until the end of the lease, which is often decades away. Looking closely, there is an escape clause that allows your wireless tenant to terminate the lease before the five-year term is up. This clause is embedded in nearly all cell tower leases and is often undetectable due to the careful wording written in by the wireless carriers. So, can your lease be terminated early? Almost always, the answer is yes. This is the risk that your lease purchaser would be assuming for you, should the wireless carrier terminate your lease after your cell tower lease buyout transaction.
Factors To Consider When Selling Your Cell Tower Lease
There are many factors to consider when selling your tower lease. Timing, tax implications, your age, interest rates, tower location, competition, carrier tenants, etc.; these all impact the value and pricing of your cell tower lease.
What's My Cell Tower Lease Worth?
A cell tower has to have a perceived value before there will be buyers bidding to purchase it. Buyers need to know that the cell site will stay for many decades to come so they can recover their investment. The structure must be solid (longevity). The ground must not have been tainted with hazardous substances (liability). The wireless tenants must be national such as AT&T, Verizon, T-Mobile (safety). If the cell tower has “inferior” tenants, such as regional, local, or non-national subtenants, then the risk is too high that these tower subtenants may not be around long enough to allow the lease buyer to at least recover their investment. This may be a concern for buyers, for example, if your site has Sprint as the wireless tenant on the tower. Many lease buyout investors backed out of purchasing towers with Sprint as the sole tenant knowing that T-Mobile may terminate the Sprint lease after T-Mobile purchased Sprint in April 2020. In a quick Google search, it could easily be found that T-Mobile has 25,000 excess towers after its acquisition of Sprint. Many factors influence a tower lease value, and these are just some of the examples of how the industry responds to the topic of price valuations.
If you are retiring, you may want to cash out now instead of waiting for monthly income. A number of our clients consider their cell tower leases to be an investment, ready to be cashed out upon their retirement. Retirees who are not making the same income as they once did may enjoy a lower tax bracket and therefore find it advantageous to sell their tower leases during retirement. We always suggest that our clients work with their tax advisors to best understand the actual tax implications of any transaction.
Tax Implication of Lump Sum Buyouts
Cell tower monthly rents generally do not expose property owners to the same tax consequences compared to lump sum lease buyout payments. This is because a cell tower lease buyout accelerates years of income to today, often pushing property owners to a higher tax bracket. We ask our clients to consult with their tax advisors to calculate the actual tax implications based on their specific tax situations. When planned and prepared properly, we can collaborate with our client’s tax advisors to execute a plan that minimizes our client’s tax implications.
The Deal Points Of Selling Your Tower or Rooftop Lease
The sale of your cell tower or rooftop lease is a full commercial transaction. It involves you, as the property owner, signing a Letter of Intent (LOI) obligating you to sell your cell tower lease for an agreed price and set terms if the wireless lease buyer, after performing their due diligence, concludes that they want to go through with the transaction. Upon your approval of the LOI, the lease buyer will send out a team to validate that the tower will be in place long-term to recover their potential investment and make a profit over the decades. The title report will confirm that you are the correct property owner and that there are no liens against the property. Their structural engineers will also check if the structure is stable. They’ll study environmental aspects of your property to detect any possible legal or financial risks as well. The buyer will want an estoppel statement from your current wireless tenant to confirm aspects of your lease and income.
Lease buyers will make sure to understand what rights you’ve retained and what risks you’ve assumed as these will be passed on to the buyers. It is important to note that lease buyers are long-term owners of wireless leases while you still own the underlying property. They do a complete check of the property, wireless asset, lease, ownership, structure, environmental, etc. before writing you that check. Terabonne is experienced in this business and understands the elements necessary to negotiate and close your transaction is essential for any property owners contemplating the sale of their wireless leases.
What Should You Do When Approached To Sell Your Cell Tower Lease?
Lease buyout companies, also known as, will make many calls and stay close to property owners over the years to make sure that whenever the property owner is ready to sell, these buyers are ready to buy. The problem with this model is that property owners are not represented and often do not receive top pricing and legal terms in lease buyout transactions. Our suggestion is that if you are not interested in selling your lease, just ignore the calls. If you are interested in entertaining lump sum cash offers for your cell tower or rooftop lease, call Terabonne to discuss your situation. Terabonne represents property owners and our goal is to obtain the highest buyout price possible for our clients.
What Does Terabonne Charge?
Terabonne does not purchase your cell tower lease. Our role is to find end-buyers and present your wireless lease to them so that they will bid on the purchase of your wireless lease. Market price is determined by a volume of buyers bidding for the opportunity to purchase your tower lease against each other. Terabonne reaches out to industry contacts, handles all the presentations, marketing pitches, and assembling tower technical details to drive up interest and prices on your tower lease. Once we obtain all the valid price offers, we consult with our property owner clients to discuss the pros and cons of each offer. We select the best offer based on price and terms, and Terabonne begins to negotiate the terms of purchase meeting our client’s requirements, risks and future values.
Terabonne handles all the due diligence work with the selected purchaser, including environmental assessments, subordination documents from our client’s banker, structural reviews, title, etc… to assure that every step of the way is managed appropriately. When the documents are all prepared, we take the time to review them with our clients, explaining every detail to make sure our clients understand the purchase terms. Upon closing, we assure that all documents are properly signed and funds are paid to our clients on the day of closing. Terabonne’s fee comes after all our work activities are done and our clients have been paid. Our fee is based on a small percentage of the final price of the transaction. This rewards us, and benefits our clients, for seeking the highest sale price possible.
Right of First Refusal (ROFR) Implications
A ROFRgrants the wireless tenant the right to match a lease purchase offer from a third party. This is a new strategy in the wireless leasing industry. Over time, wireless carriers learned that their competitors were purchasing their tower leases and making it difficult for the wireless carriers (and tower owners) to operate their towers the way they intended. Say, American Tower (ATC) buys the lease for a tower owned by Crown Castle. Now American Tower Company can deny applications for upgrades or require excessive rent increases, thus disrupting their competitor’s business. Therefore, wireless carriers would rather purchase the lease themselves if the property owner is selling it, rather than allowing a competitor to control their tower lease. ROFRs have zero impact on property owners who do not sell their leases, but do have implications if they want to sell the cell tower leases in the future. A company looking to purchase a tower lease becomes less inclined to make offers if they see that the lease has a ROFR because the effort put into due diligence could be wasted if the wireless tenant chooses to match their offer. There would be fewer offers from prospective buyers, which could have adverse implications on pricing. For this reason, it is best to have Terabonne as your consultant. We work to understand the terms of your cell tower lease, keeping your plans and needs at the forefront, so that proper actions can be taken to achieve top pricing and terms needed in the sale of your tower lease. Terabonne offers the expertise needed to overcome all obstacles to complete your cell tower lease buyout transactions as we have done for so many satisfied property owners.
Sell The Land And Tower Separately
Many clients seek our help to sell their properties but retain the cell tower rental income forever. This is accomplished only while the property owner is still the owner of both the cell tower lease area and the parent property itself (land or building). It is very important to plan this ahead of time so we can assist in creating a Reservation Of Easement whereby a special easement is created, precisely defined using surveyed drawings and legal descriptions of the areas affected by the cell tower lease to be forever retained by the property owner. The property owner will then grant to himself/herself the easement rights, thereby having the legal right to collect the rental income forever. The property owner is now free to sell the underlying land/building to anyone later. The tower rent will forever be going to our clients and the rent can be passed on to their heirs just like any other assets in their estates. If this is done in conjunction with a cell tower lease renewal or extension, we can often negotiate in the survey and legal descriptions of the easement areas that will save our clients thousands of dollars in completing this task.
How to Determine the Best Offer to Sell My Cell Tower Lease?
In a typical transaction, buyers of cell tower and rooftop leases will want to buy out your rental income in return for a lumpsum upfront payment to you, regardless of when your tower lease expires. Conditions of the cell site, the terms of your wireless lease, proximity to nearby towers, and other factors do swing the price up or down. The lease buyer becomes the new landlord of the cell tower lease on your property and take over negotiations of future lease extensions. These many factors that determine pricing drive the proprietary financial models created by each wireless lease buyer. However, the biggest drivers of pricing are the financial and contractual terms of your wireless lease. This is why jumping to cell tower lease buyout negotiations may not be in the best interest of our clients. While these are the key determinants of pricing, there are other factors that influence pricing such as location, interest rates, and cellular traffic growth potential. Having a thorough understanding of your site’s value will help guide the bidding process and term negotiations to get the most out of your lease buyout transaction.
When Is The Best Time To Sell Your Lease?
Lease Aggregators can paint a very dire picture of a shrinking wireless industry trying to scare landlords into selling their cell tower leases. We do not subscribe to such an approach. The right time to sell is when property owners feel it is in their best interest to sell. You as the property owner must control the timing, not the companies trying to purchase your tower lease using scare tactics. If you feel the time is right for you to receive lump sum cash for your cell tower leases, please contact Terabonne for an analysis of your situation and our proposed strategy for the best way to obtain the highest prices and the best terms for your cell tower or rooftop buyout.
Cell Tower Lease Buyout – How We Help
Let’s discuss your cell tower opportunity. We will share with you what we know about your cell tower ground lease. Never a fee until we agree to work together and we deliver all-inclusive results to your satisfaction. Unheard of assurance and confidence. Please email, call or send us a message anytime.