(article updated on November 28, 2019)
Who is American Tower Corporation?
American Tower Corporation (NYSE:AMT) is the largest cell tower operator in the United States with approximately 40,000 cell towers. Many U.S. property owners have American Tower Lease Agreements that are now being discussed as a renewal or a buyout.
Headquartered in Boston, they are a real estate holder that focuses on wireless communications infrastructure. Specifically they invest in cell towers and cell sites.
- In October of 2013 they acquired smaller cell tower operator Global Tower Partners for approximately $4.8 billion.
- In Q1 2019 in their 10-K filing with the SEC they reported an 85% profit margin on their cell towers. They are clearly a savvy owner-operator of cell towers across the United States.
- In September of 2019 AT&T signed a new agreement with American Tower to continue to lease space on their cell towers.
When does American Tower build new towers?
They typically build cell towers when there is a need from the wireless companies. They receive build-to-suit contracts from wireless carriers such as AT&T and Verizon . These contracts state that if American Tower pays for and builds the cell tower, the wireless company will agree to lease space on the cell tower.
This business model is profitable with one tenant, however, the real gains are made when the cell tower has multiple tenants. With multiple tenants on the tower comes multiple revenue streams and a high profit margin.
American Tower will either directly contact a property owner or contact a property owner through what is called a “site acquisition agent”. An initial offer is made to the property owner to gauge interest in having a cell tower lease and it is always below market.
Tower companies and the local cell tower lease experts they hire know the market. They want to get the best deal for them, not you the property owner. It is therefor important that you receive expert representation from cell tower lease experts such as Airwave Advisors to ensure you receive a fair market deal.
Why has American Tower contacted me to extend their lease?
A tower company’s cash flow is dependent on their cell tower located on your property. If their lease is coming up for expiration their cell tower is in jeopardy as well as the cash flow. To secure future cash flow American Tower has been contacting property owners like you years in advance. They request to extend the lease at this time but is it in your best interest to do so? Sometimes these lease extensions are not in your best interest to sign at this time. The reason being by signing a lease extension it will lock you the property owner in for additional terms (sometimes decades). Cell tower companies on the other hand typically has a 30 to 60 day termination clause.
Is it fair and balanced to enter into an agreement that you cannot terminate for decades but the other party can terminate in 30 days notice?
That is where we come in. We have received hundreds of phone calls from property owners who have been contacted regarding American Tower lease extensions. Often the property has been contacted through third party agents such as the Lyle Company or Tower Alliance.
If you have been contacted by a third party and not American Tower Corporation, chance is your lease does not expire for many years. Typically the contractors are trying to extend leases that expire in more than five years. It is a case-by-case basis on if this agreement is worth renewing at this time. Often we review the agreements and we determine that it is in your best interest to wait. Let more years pass by and you will be able to secure a better deal. To know with certainty have your lease reviewed by us today!
If you have been contacted directly by the tower company then your lease likely expires in under five years. Now is the time to understand the true value of your lease. We will review your cell tower lease, their proposal, and we will add value to your deal.
What can I negotiate in a cell tower lease renewal?
Everything! One-time payments, rent increases, rent escalators, total term etc. Often we review the lease and there are other provisions that need an update. Some leases lack sufficient insurance requirements, assignment terms, and basic removal language. You need to think of every possible conflict that may occur with your tenant. Plan ahead and insert language to potentially avoid a future conflict.
Should I agree to a right of first refusal and a confidentiality provision?
Absolutely not. Both provisions will financially hurt you if you ever want to sell your lease in the future. Often landlords will think they do not want to sell, or may never sell. Things change over the course of time, medical emergencies, loss of income, etc. All the sudden they want to sell their lease and they have handcuffed themselves by agreeing to bad language in the amendment.
Have a cell tower lease expert assist you!
Don’t make mistakes and don’t leave money on the table. Nick G. Foster of Airwave Advisors is the leading landlord advocate with extensive experience with American Tower lease renewals. Contact us today to maximize your opportunity!
“I met with Nick at my property and engaged his services to assist us with our lease renewal. Nick was very professional, timely, and obtained results that greatly exceeded his fees. I would highly recommend Nick’s services to any landlords that have cell tower leases coming up for renewals!”
Kenny M., Managing Partner, MAR Investments
Call Us Today
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About Nick G. Foster
Since founding Airwave Advisors® in 2014, Mr. Foster has added value to over 400 clients ranging from the State of Nevada, City of Beverly Hills, to Habitat For Humanity. Mr. Foster focuses on cell tower lease renewals, buyouts, new lease negotiation, and cell site lease management. Prior to starting Airwave Advisors® Mr. Foster founded and led the Cell Site Services Group within nationwide commercial real estate services leader Cassidy Turley (now known as Cushman & Wakefield).