Cell tower lease agreements are unlike any residential, or commercial, lease agreement. This is due to the very specific use of a cell tower, also known as an unmanned communications facility. The cell tower lease agreements are typically presented by the tenant, not the landlord. This is the complete opposite of traditional residential and commercial leasing. Since the property owner is likely going to sign a lease agreement drafted by the tenant, it is imperative that the agreement is thoroughly reviewed by cell tower lease experts such as Airwave Advisors®.
Here are 7 Common Cell Tower Lease Agreements Items To Look Out For:
1. Premises Lease Only Lease What You Have To
It is absolutely alarming when we see cell tower lease tenants requesting 100′ x 100′ land lease areas (10,000 square feet). They simply don’t need that much space. Most cell towers only require a few hundred square feet of land, not 10,000 square feet. Don’t lease more property than you need to; you will be giving up more than just the rights to that land for the next 25 years.
2. Don’t Negotiate Rent Without An Expert
We often review lease agreements of previous deals negotiated by property owners without the help of experts. It pains us to see low rents, bad lease language, and unfavorable terms for the landlord. The cell tower lease companies have experts on their side, shouldn’t you? Have cell tower lease experts such as Airwave Advisors assist you in your cell tower lease negotiation and don’t leave money on the table.
3. Rent Escalations
Here again, we see many deals that were negotiated by property owners without the help of cell tower lease experts, which resulted in unfavorable lease provisions for the landlord. The value of money decreases over time, and so can your cell tower lease. Unfortunately, many landlords do not realize that they may leave tens, or even hundreds of thousands of dollars on the table, simply because they did not use a landlord advocate like Airwave Advisors. The cell tower lease companies have experts on their side, shouldn’t you? Have cell tower lease experts such as Airwave Advisors assist you in your cell tower lease negotiation and don’t leave money on the table.
4. Take Caution When Granting Options
Many new cell tower lease agreements are options in the beginning. The tenant writes the landlord a one-time check and they have the option of exercising the lease or passing on the opportunity. We have received some new leases agreements where tenants are asking for three (3) to five (5) year options in exchange for paying the landlord $100.00. Proposals like this are a red flag, how serious is this tenant to really rent your property? Be very cautious when granting anyone an option to lease your period for an extended period of time. What is that option worth to you?
5. The Minimum Amount Of Term The Better
Extension terms, while attractive to landlords in commercial leasing, are not in the landlord’s best interest in cell tower leases. That is because cell tower leases typically allow for the tenant to terminate with thirty (30) days notice, however, the landlord cannot terminate until lease expiration. So if the landlord agrees to thirty (30) years total in lease extensions, they are locking themselves into the lease for that period of time, while the tenant can terminate next month if they want to.
6. Remove The Right Of First Refusal
The Right of First Refusal, or Right On Sale, provision needs to be removed from any cell tower lease agreement. The tenants rights are significantly protected in the lease agreement and this provision is overreaching. By keeping this provision in the cell tower lease agreement, you significantly restrict your ability to sell the cell tower lease in the future. When many buyers see this provision in a lease, they will not waste their time on making an offer to purchase your lease. Why make an offer to buy something, if someone can just take the deal at the price you have offered? Don’t limit your options – have the right of first refusal removed from your cell tower lease agreement.
7. Tenant’s Have Experts On Their Side, Make Sure You Have Experts On Your Side
There is a reason cell tower lease companies use cell tower lease experts in every deal – results – it gets them better deals. If your tenant is using cell tower lease experts to negotiate against you, shouldn’t you have cell tower lease experts looking out for your best interests?
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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).