With the start of 2021 we have started to receive calls from property owners who have ben contacted by DISH Network. Even though DISH signed an agreement with Crown Castle to access 20,000 cell towers, they are still building their own cell sites. After reviewing the DISH Cell Site Lease Agreement, here are some observations we have.
1. DISH has their own unique lease agreement.
While this sounds a bit funny to say, we often see companies copy and slightly change each others agreement. We can say with certainty that DISH has drafted their own lease agreement and they are not copying any of their competitors. While certain provisions and definitions in the DISH agreement can also be found in other agreements in the industry, overall the document is original.
2. The DISH lease agreement still requires extensive revision!
The DISH Cell Site Lease Agreement has very broad language defining their Premises. Using the words “approximate” square footage gives them wiggle room if they expand outside a specific quantity of square footage. In addition, there are no real restrictions on them installing additional equipment and taking up more of your real estate in an “Approximate” area. This of course needs to be revised and the Premises DISH occupies needs to be confined to a specific area. You wouldn’t lease a space to an office tenant and then let them put their desk out in a hallway. Why should a cellular tenant be allowed to expand ad infinitum.
3. DISH needs to pay you money at signing!
Per the agreement rent commences upon the Commencement Date. The Commencement Date is defined as the earlier of twelve months from mutual execution of the agreement, or the first day of the month following their install. However, what if they never construct, or if they terminate the agreement prior to twelve months from signing? Then you of course will have wasted a significant amount of your time and you would have received no compensation in the process.
Instead DISH needs to compensate you for entertaining the lease request, for granting them exclusivity to lease space on your building for one year. This is also known in real estate as granting an Option to a party. They can exercise (or in this case construct), or they can back-out. Regardless, they need to compensate you for receiving that option.
4. Beware low rent and rent escalators
The proposed starting rental I reviewed on the DISH agreement that hit my desk was significantly under market and they proposed a 2% rent increase every five years? I am guessing DISH is hoping that whoever owns this property doesn’t understand how inflation works. Bottom line is if a property owner agreed to a 2% rent escalator every five years, the property owner would receive significantly less in rent, year after year. Inflation would degrade the value of the dollar received by the property owner and the rent escalator would be unable to keep up. The whole point of a rent escalator is to have the value exchanged between the two parties (rent) to be maintained over time against any outside forces (inflation) that could impact that value.
5. Utilities – Don’t make yourself a middle-man
Anytime you have a wireless company install a cell site on your building you should always have them setup an electric meter with the local utility company.
In the DISH cell site lease agreement they have language that would allow you to act as a middle man and they would pay you a fixed utility rate (regardless of how much they actually use in utilities). This of course is a bad idea and should be changed to put the responsibility on DISH to get their own electric meter.
6. Assignment Language – Don’t let the tail wag the dog!
The template language in the DISH cell site lease agreement says, “Neither Party may assign or otherwise transfer any of its rights or obligations under this Agreement to any third party without the prior written approval of the other Party”. This means you cannot sell your property and assign your lease with the approval of DISH and there is no time frame on how fast they have to respond to your approval request. This is the tail wagging the dog and it is completely unacceptable.
7. Have your lease agreement reviewed by a cell site lease expert!
Having previously represented AT&T in cell site lease negotiations and having experience negotiating hundreds of cell site lease agreements over the last 10 years, Airwave Advisors is here to help you the landlord with your cell site lease.
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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).
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