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Defend Against Cell Tower Rent Reduction

Tower Lease 101 > Rent Reduction

Cell Tower Rent Reduction

As the wireless industry evolves, carriers grow more conscious of their operational costs and look for ways to reduce their most expensive line items. The “Leases and Rents” category is always on the top three list of highest operational costs. Wireless carriers have hired companies like Md7 (Verizon) and Blackdot (T-Mobile and AT&T) to call property owners who are deemed to be “high rent” to re-negotiate lower rents for the carriers to remain on these properties. The argument is if the property owner does not reduce the rent, the wireless carriers will have no choice but to leave the property. How serious is this threat? The answer to that depends on the site and its value within the wireless system. In some cases, we do find that the rent is excessively high and it does make sense for carriers to move to another property if their rent is not reduced. In these situations, we find a way to negotiate a fair arrangement for both parties to secure longer commitment from the carriers. 

Sample Rent Reduction Letter

Get a Higher Rent for Your Property

In some cases, we find that the rent is actually not high enough, prompting us to negotiate higher rent for our clients. The only way to determine if the threat is real is by digging deeper into the system design to see how essential the site is relative to other options available to the wireless carriers. We never accept the wireless carriers’ statement that the rent is too high. That conclusion is too self-serving. We independently review the cell traffic requirement of the area, including the optimization and integration plans with surrounding cell sites to best understand traffic volume. That in turns reveals to us the value of the cell site and your property. We also study the zoning code for the area to understand the conditions of approval for zoning a replacement tower in the same search ring. Then we act as if we are designing a replacement tower – where would we go? Where would the fiber optic distribution point come from, how would the electrical be run, how much would it cost the carriers? Are there sufficient relocation alternatives to move the tower or rooftop build? Only after a deep dive into a relocation design will the real facts as to your lease situation reveal themselves. At times, getting a rent increase is not an uncommon result from our rent reduction reviews. 

Cell Tower Rent Rate Experts

Terabonne is often approached with these situations and we are ready to assess your case and determine if rent reduction is a valid concern on your site. When the tower company threatened to relocate the cell tower to a neighbor of Mr. Bellman, a landowner in Parkton, Maryland if he did not agree to a substantial rent reduction, he had cause for concern. In fact, the tower company provided our client with a copy of the lease they had signed with the neighboring property owner at 25% of the rent. This is a veiled threat that they mean business if our client does not comply. We at Terabonne methodically studied the engineering, zoning, alternative designs, etc. and shared the results with the tower company. Then we set out the terms by which we would allow the tower to continue to operate on the property. While the process was nerve wracking for our client, it was a thrilling project to negotiate with engineering facts and empirical data, rather than responding to fear and threats. In these situations, we always come out ahead. Today, Mr. Bellman enjoys a very healthy cell tower lease with all the terms modernized to 2020-era knowing that his lease is rock solid for decades to come.

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A ROFR grants the tower owner the right to match an offer by some third party who makes an offer to purchase your lease that you accept.

Crown Castle, American Tower ATC, SBA Towers are the “Big Three” tower companies.

Attorneys retained by wireless carriers authorized to review legal terms but never allowed to negotiate financial nor technical terms of the lease because they lack the technincal skills.

A person who specializes in land use matters well knowledgeable in its jurisdictional requirements.

A person hired by the wireless carrier to contact property owners to discuss lease terms. This role has evolved to be landlord facing rather than lease negotiations.

Geographical areas depicted in a circle (ring) drawn by radio frequency (RF) engineers defining the areas requiring new cell towers and technical parameters surrounding such designs.

Companies who build towers and lease back to wireless carriers.  These companies almost always receive Search Rings from wireless carriers defining where carriers need towers to be built.

Radio Frequency engineers who specialize in the radio wave propagation. These are the engineers to define cell tower locations. 

Companies that purchase cell tower leases with the purpose of repackaging (aggregating) them in a larger portfolio and selling them for a profit at a later time.