- US Cellular is the fifth largest wireless carrier in the US operating primarily in rural markets.
- They own approximately 4,000 cell towers, about 63% of sites they operate on.
- US Cellular operates their cell tower lease agreements under the entity McDaniel Cellular Telephone Company, a Delaware corporation.
- To assist in their growth, companies like MD7 has been calling property owners like you trying to reduce the rent that US Cellular pays. This is not something you as a landlord are obligated to do. To learn more about rent reductions read our article here.
1. US Cellular Tower Decommissions
Over the years US Cellular sold their spectrum in the Chicago and St. Louis markets to Sprint. Sprint then announced in October 31, 2013, they would shutdown US Cellular’s network in St. Louis and in Chicago on January 31, 2014. As a result cell tower lease buyout prices (in those markets) for US Cellular leases in 2014 took a nose dive.
2. US Cellular Cell Tower Lease Extensions
Property owners like you have been contacted asking for cell tower lease extensions. While this may sound like a good idea at first – its important to know that often your tenant has a thirty 30 day termination clause in the lease.
If this is the case, a lease extension is going to lock you into a lease agreement for the next 20 – 30 years and not your tenant.
It is best to have your lease reviewed by a cell tower lease expert like Airwave Advisors.
3. Don’t Lease Your Tenant More Space Then They Need
We recently reviewed a US Cellular lease and they requested to lease over 5,000 square feet. They actually only need less than a 1,000 square feet.
Why are they requesting to lease so much space?
A logical explanation is that they plan on selling their cell towers one day and a cell tower lease that has a large lease area will be able to accommodate sub-tenants. Thus making the lease more attractive at the time of sale.
4. Negotiate Option Term & Option Payments
In the template lease provided by US Cellular they request an 18 month option with an additional six month option. Each option payment is only $1,000.00. This is the equivalent of a major corporation paying you $55 per month to reserve your land for them for 18 months. Absurd.
A major factor for property owners to consider is their out of pocket cost when entering into a cell tower lease. Should you engage cell tower lease experts to assist you prior to entering into a one-sided 30 year lease agreement drafted by your tenant? Of course. There are pitfalls in the agreement and sections that need to be further enhanced.
The bottom line is the option payment should be increased to assist you in at least recouping your out-of-pocket expenses in entering into a deal with them.
5. Beware The Use Of The Word Premises
In the US Cellular lease they create a defined term for the lease area where they are building the cell tower. They then create a defined term for their access and utility easements. Then strangely enough they join those two defined terms into a singular defined term labeled “Premises”.
The problem with the template agreement is Premises is used so broadly that they could technically construct a cell tower and infrastructure on their road and on their access routes.
Remember to redefine terms and change language as needed. If you need help engage Airwave Advisors and we can assist you further.
6. Assignment Of The Lease & ROFR Need An Overhaul
The assignment of the lease section is written so poorly that this lease can be assigned to anyone. US Cellular can assign the lease to a shell company with no assets, declare immediate bankruptcy, and you are stuck with a tower on your property. The assignment language needs an immediate overhaul!
The Right of First Refusal (“ROFR”) is so bad it should be deleted in its entirety. Why should your tenant have the ability to freely assign their lease, but you are handcuffed on your sales transaction? Do not allow your tenant to become your master. In the future if you want to sell your cell tower lease, you should freely have the ability to do so without restrictions.
7. How Can Airwave Advisors Help You?
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
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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).