carrier, with the rights heavily slanted in favor of the tenant.
Although you will be receiving rent long-term from a credit
worthy tenant, the language that you agree to in the lease
agreement is just as—if not more important—than the increase
3. CONSIDER SELLING THE CELL SITE LEASE SEPARATELY
THAN THE PROPERT Y
When exiting a property, depending on the cap-rate of the
investment property, it may make more sense to sell the cell site
lease separately than with the fee simple interest. For example,
if the property is positioned as a value-add investment office
building selling at an 8 percent cap-rate, and the cell site, if
sold separately from the property, can sell at a 6. 5 percent
cap-rate, then it makes sense to sell the cell site lease prior to
putting the building on the market—thereby maximizing your
sales proceeds when exiting the property.
Another example of when it would make sense to sell the
cell site lease separately is if the property is vacant and being
marketed as an owner-user opportunity. A buyer is likely
purchasing the property for its utility value to meet the needs
of their business, not for the rooftop cell site income.
The bottom line is that it all comes down to simple math.
Determine what the total sales proceeds will be from either
packaging the lease in with the property, or selling the lease.
4. CELL TOWER EASEMENT PURCHASES QUALIFY FOR
When selling a cell site lease in a transaction that includes
an easement for 99 years, many sellers roll the cell site sales
proceeds into a new property using a 1031 exchange. Always
consult with a qualified tax expert prior to pursuing a 1031
exchange for your cell site lease in order to ensure your specific
5. ALWAYS PURSUE REDEVELOPMENT LANGUAGE IN
As I stated earlier, cell site leases typically range in term from
25 to 35 years. During the term, if you need to relocate the
tenant temporarily, or permanently, you will have an extremely
difficult time if redevelopment language is not already agreed
to in the lease agreement.
Relocating a tenant can often cost up to $30,000 for a temporary
relocation and up to $250,000 for a permanent relocation. The
redevelopment language should state who is going to cover
this cost. Always negotiate relocation language up front and
don’t get stuck paying for your cell site tenant to relocate.
6. TERMS T YPICALLY AUTO RENEW; CAN YOU STILL
TERMINATE THE LEASE?
In most cell site leases, unless there is a monetary default
(non-payment of rent), the landlord will unlikely be able to
terminate the lease during the term. Typically, the lease terms
renew automatically, without the need for the tenant to provide
a formal request. So don’t be fooled if a representative for the
carrier says the lease is an initial term of five years, with five,
five-year renewals. The bottom line is the lease is 30 years and
the landlord will unlikely have the ability to terminate the lease
during that time.
The tenant, however, can typically terminate within 30 days
for any reason. The landlord is locked into the agreement for
30 years and the tenant is only locked into the agreement for
30 days. Although it sounds crazy, that is the “norm” in cell
7. CARRIERS HIRE CELL SITE EXPERTS TO SECURE THEM
THE BEST DEAL
Top U.S. carriers, such as the one you probably pay monthly
for your cell phone plan, don’t negotiate their own cell site
deals. They hire experts, called Site Acquisition Agents, to
negotiate the best deal for them. The agent’s goal is to get
the property owner to agree to the lowest rent, with the most
minimal changes to their lease agreement possible. Knowledge
is power and your cell site tenant is well-equipped when
negotiating rooftop leases. If you feel you could benefit from
having an expert on your side, seek out assistance to tip the
scales of negotiation in your favor.
Nick G. Foster
Founder & President
Airwave Advisors® combines 25
years of industry experience in
order to help landlords maximize
opportunities with their cell tower
leases. Whether you need help:
NEGOTIATING A NEW LEASE
EXTENDING AN EXISTING LEASE
SELLING YOUR CELL TOWER LEASE
YOUR CELL TOWER LEASE EXPERTS