Cell Tower Lease Buyout Values...
There are many factors that determine how much a cell tower lease is worth. Offers can reach up to 168 times the monthly rent and beyond. An offer of this magnitude is dependent on having the best scenario for each of these factors.
Factors That Determine
How Much a Cell Tower Lease is Worth
Wireless Leases, for the most part, are very similar. It is the small differences that vary the value from lease to lease. The information you need to have when you call us are; Current Rent, the Escalator (which is found in the Term Section of your lease) and the date the last option in your lease expires. Those three pieces of your lease are the key pieces that allow Wireless Investment Group to determine the value of your lease.
The risks are real. Present or potential redundancy, in the future, due to advancements in technology or newer and less expensive tower sites becoming available. Historically, although thousands of new cell sites are built yearly, 1 to 2% of present sites are terminated early each year. These factors do come into play in determining the value of your lease.
Once your cell site lease is sold, if a carrier chooses to cancel the lease, you are not liable. The company that buys the lease loses out, not you.
Fees and Commissions
Wireless Investment Group, never charges the Seller a fee to sell their cell site. The fee is always paid by the buyer ensuring that the Seller maximizes the total amount of money that they receive.
Redundancy can happen for different reasons; the most common reason is when 2 carriers merge. A tower or rooftop that houses equipment, which is servicing the two carriers that have merged is referred to as “overlap” in the industry. An example is if Sprint and Nextel equipment were on the same tower or rooftop. We would say that there is a Sprint/Nextel overlap on the site, meaning that one of the “overlapping” sites will surely come down in the near future. Most leases contain a provision that allows the tenant the right to cancel with as little as 30 days’ notice.
This factor is unpredictable, because we can never predict when two companies will merge. This will make a drastic difference in the value of a tower site lease or a rooftop site lease. If your tower site has no redundancy, and little risk for redundancy in the future, your cell tower lease may be worth its maximum value right now. Because that could change at any time, and the result would be a significant loss in value.
Cell Tower Site Location
The location of your cell tower site or rooftop does not impact on the value of your lease as much as traditional real estate. A rooftop lease in the middle of New York City and a cell tower ground lease in the middle of Kansas do not necessarily have the same value, but the multiple paid for the cash flow associated with the lease is very close to the same.
Cell Phone Carrier Tiers
The carriers are split into
3 categories as far as buyers are concerned:
Tier 1 - These carriers are Verizon and AT&T and they will garner the highest offers as they are considered “investment grade”. Leases with a tier 1 tenant will bring an offer of approximately 174 times monthly rent.
Tier 2 – T-Mobile and Sprint make up the second tier of tenants. They both are considered significant players in the market place, but are not quite as valuable as AT&T and Verizon. A lease with a tier 2 tenant will bring somewhere around 168 times monthly rent.
Tier 3 - Smaller cell carriers who are small enough to be bought out or merge, but have not merged yet.
These carriers are considered a slight risk because if they merge or are purchased by another carrier, an “overlap” or redundancy may cause their lease to be terminated. Depending on the strength of a particular company, the leases with these carriers can bring between 36 - 72 times monthly rent
Cell Tower Lease Terms
Lease terms are another important factor in determining how much your cell tower lease is worth. Basically the lease terms dictate how much your lease is going to be worth.
The 3 most important are:
- Present Rent
- Yearly or Term Escalation %
- How many years left on the lease
Type of Cell Tower, Site and Equipment
The structure that the carrier's equipment is attached also determines a large and important element in pricing. The most common type of structures that will be on a Seller’s property is cell towers or the equipment will be on the seller’s rooftop. We will be happy to evaluate your particular site to let you know exactly what equipment is on your site and exactly how much the lease(s) is worth.